VAT – is it a van or a car?

It is important to understand whether a vehicle is a van or a car for the purposes of VAT input tax claims, VAT fuel scale charges and for assessment of tax due (by the employee) and NIC (by the employer) when provided as benefits in kind.

The statutory definition of a car is included in HMRC VAT Manual VIT50300. http://www.hmrc.gov.uk/manuals/vitmanual/vit50300.htm

Input VAT cannot be reclaimed on the purchase of a car but it is reclaimable on the purchase of commercial vehicles (which include Vans).

When a car is provided by the employer for private use then VAT fuel scale charges must be applied however this does not apply to commercial vehicles.

A van for VAT purposes is a vehicle with 3 or more wheels that is not a car. To confirm a 2 wheeled vehicle is a bike.

A car is manufactured primarily for carrying passengers, has rear windows, or space for them and a roof behind the driver.

The following are not cars:

  • Commercial vehicles, primarily designed for carrying goods and which have a payload of at least 1 tonne
  • Vehicles which weigh in at more than 3 tonnes
  • Buses, ambulances, hearses, breakdown vehicles, ice-cream vans, caravans.
  • Vehicles which are capable of carrying only one person (the driver) or more than twelve persons (including driver)

What might be classified as cars or vans:

  • Double cab pick-up vehicles.
  • Modified vehicles

It is in these categories that there would appear historically some uncertainty. An example of a particular vehicle is a Land Rover Discovery. The VAT status of a particular model of car is important to define and it is here where HMRC have sought to provide some clarity by producing the list of cars derived vans and combi vans.https://www.gov.uk/government/publications/hm-revenue-and-customs-car-derived-vans-and-combi-vans

The list is based on vehicles that manufacturers have notified to HMRC and will be updated from time to time and so it is worth checking the current version of the list before you acquire a vehicle. Guidance as always can be provided by your Barnes Roffe LLP contact partner.

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