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What's A Car?
Customs & Excise have recently clarified the borderline between a car and a van. It matters for VAT because you can't generally get the VAT back when you buy a car, but it's not such a problem with a van. Customs point out that a vehicle with windows behind the driver is a car for VAT, even if it's mainly used for goods, unless it can carry a payload of one tonne (in addition to any hard cover that may be fitted over a flat-bed).
This means that 'double-cab pick-ups' can qualify as vans as long as they are big enough. If you use the vehicle for private purposes as well as business, you can either claim back all the VAT on the purchase upfront and pay a little back each quarter as you use it, or you can just claim the business percentage back at the outset. If it was a car, you couldn't claim anything back at all for the purchase.
The difference is also important for income tax, where the tax charge on a company van is much less than the charge on a company car. The definition isn't so precise for tax - some Inspectors use the VAT distinction because it's clearer! But a van is supposed to be 'of a type not commonly used, and not suitable for use, as a private vehicle'. A double-cab pick-up probably still satisfies this, but if too many people took advantage, perhaps it would then be common and everyone would have to pay more income tax.
| Customs' discussion of the nature of a car can be found in Business Brief 16/2004, which is available through Customs' website (www.hmce.gov.uk). |
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