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Author: JP / / Latest News

Beware…..Combi Vans are probably CARS for benefit purposes!

Lots of van manufacturers are now introducing “Combi” versions of their vans (also sometimes termed “Crew” Vans – VW Kombi, Mercedes Dualiner are examples).

Basically they’re a van but with an at least one extra row of seats, doors and windows behind the driver.

Whilst these are generally a commercial vehicle for VAT purposes and for road tax purposes, the direct tax rules (for benefits in kind and capital allowances) do not follow the same principals.

This is where you need to be careful if you are looking to purchase/lease one of these vehicles (or have already done so) particularly if it is to be used for any private purposes by any employees/directors.

Firstly, it is unlikely to be eligible for the Annual Investment Allowance, meaning standard Writing Down allowance only at 8% (as it is unlikely to have C02 emissions below 130g/km).

Secondly if there is private use:

a)    it will not be eligible for the van exemption where private use is ignored if its home-work only.

b)    It will be taxed like a car based on list price and Co2 emissions.

All this is due to how the legislation determines what is a car and what is a van for these purposes.

Basically everything is a car unless it falls into one of the exemptions. The ‘van’ exemption is if it is “a goods vehicle – being of a construction primarily suited to the conveyance of goods or burden” (as opposed to the carrying of people).

So, the test is about the vehicle construction, not what its actually used for. HMRC’s argument is that a vehicle with extra seats, doors and windows for several passengers cannot be primarily constructed for carrying goods or burden.

They even take this point where the seats are not actually fitted but are capable of being so, because to reiterate, it’s about what the vehicle was constructed for not how it’s actually used.

Finally, do not think that these vehicles are treated like Double Cab Pickups – these alone are treated as vans for direct tax purposes using the VAT definition of being able to carry one tonne of load – this rule does not apply to any other vehicle for direct tax purposes.

Therefore, you need to think carefully before you get one of these vehicles, the tax implications are much worse than you may realise. If you already have one in your business then I suggest you call the tax department to discuss the matter.

 

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