You may have seen an article published last week from HMRC in regards to proposed changes around the tax treatment of “Double Cab Pick Ups” following a tax case result regarding Coca Cola. The change was significant with this type of vehicle being proposed to be classed as a car, rather than a van. The tax consequences of this are significant.

Who were we to think that government U-turn on decisions were behind us – but they aren’t.

A few days following the announcement of the proposed changes, we are back to where we were before with the proposed changes now no longer going ahead.

But why is this significant for businesses?

• Where the vehicle meets the qualifying criteria to be treated as a “goods vehicle” for tax purposes, then the benefit in kind treatment is as per a van. This means a flat rate of charge for the benefit and also the case if the employer provides fuel for the vehicle as well. Unlike cars, this isn’t linked the value of the vehicle or the CO2 emissions.
  
  
• Most cars, except for new electric vehicles and those used in certain vocations, have a lower rate of capital allowances attached to them. A qualifying van will qualify for full allowances that are applicable at the time in the year of purchase, this giving rise to significant taxable offset in that year.
  
  
• Most commercial vehicles also carry VAT on the purchase of them, so for VAT registered businesses this again gives an offset at the time of purchase. Not all cars will carry VAT on the purchase of them, but also the use of the vehicle will determine what (if any) VAT is claimable by the businesses but in most cases this is significantly less than a van.

This is a favourable U-turn that has happened and one that many businesses will be pleased with, despite the uncertainty and worry that has been caused over the past few days.

Our advice – if you are looking to buy a vehicle through your business always run it past your accountant. We assist clients with establishing the tax treatment of the vehicle and the decision on how you may look to fund the purchase.

Not sure what you need to do – reach out to the team today and we would be pleased to assist.

#doublecabtrucks