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Newsletter issue - August 09.
Certain pick-up trucks and other commercial-type vehicles are built to very high comfort standards these days, so a pick-up or 'van' can easily be used as the main family vehicle. In which case does the company owned van become a company car?
The distinction is important because the benefit in kind tax charges are far higher for a car than a van (see example). Also vans, but not cars, qualify for the annual investment allowance (AIA), which allows the full cost of the vehicle to be set against profits in the year of purchase, subject to the AIA cap of £50,000.
Example
The Mazda BT-50 2.5 TD double cab pick-up has a list price of £15,063 and a CO2 emissions rating of 244g/km. The table below shows the difference in the taxable benefit for 2009/10 should this vehicle be classed as a car or van.
Taxable benefit of private use: Car:£5,272 Van:£3,000
Fuel provided for private journeys: Car:£5,915 Van:£500
Total taxable benefit: Car:£11,187 Van:£3,500
In tax law a van is a goods vehicle that has a design weight not exceeding 3,500kg. In addition the HMRC guidance specifies that a pick-up truck is a goods vehicle if it has a payload of at least 1 tonne. Payload is the difference between the kerb weight and the gross weight as stated in the vehicle's specifications. So if the pick-up is primarily designed to carry goods rather than people and can safely carry 1 tonne in weight, it falls squarely into the van category.
However, this statement about the 1 tonne payload is not law, it is only HMRC guidance. If you have a pick-up that carries less than 1 tonne it will be a van for tax purposes if you can show that it is either:
- a goods vehicle; or
- a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used.
It doesn't matter what the vehicle is actually used for, its what it was designed to be used for that counts. The Taxman says in his own internal manuals: "Actual use of a particular vehicle is irrelevant: the statutory test is a test of construction, not use."
For advice on choosing the right vehicle to qualify as a van please contact us.
