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Under HMRC what can be claimed as a commercial vehicle and can input tax be claimed?
Is it important to establish when buying a vehicle for a business whether it will be treated as a car or a commercial vehicle. VAT cannot be claimed on cars, but it can be claimed for commercial vehicles if the sales invoice shows VAT and was purchased through a VAT registered company/individual.
Capital allowances can also be claimed on commercial vehicles, as these will be classed as Plant and Machinery, this is an allowable deduction against profit.
Many pick-ups are treated as commercial vehicles which can make them a more appealing company car option.
Car or commercial vehicle?
The basic definition of a car is:
Claiming input tax on the purchase of a vehicle:
Input tax can be claimed for vehicles used primarily as a taxi, driving instruction car or self-drive hire car.
Or for a vehicle that will be used exclusively for business purposes and not available for private use to anyone. This places a high burden of proof and the owner must ensure that even in an emergency the vehicle cannot be used for personal use.
Benefit in Kind
Vans are charged on a flat rate of £3,350 and the fuel benefit linked to a van is also at a flat rate of £633 in 2018/19. Whereas with a car the benefit in kind charged is linked to the car’s list price and the amount of Co2 emissions.