Home / Blog
When is a van not a van for tax purposes?
3 June 14 | By: Jas Jhooty
There is a certain type of vehicle where it becomes difficult to establish whether the car benefit rules or the van benefit rules should apply. These vehicles are commonly referred to as double cab pick-ups. The rules to determine whether a vehicle is a car or a van are as follows: -
Definition of a carFor the purposes of company car taxation, a car means any mechanically propelled road vehicle except for:
- a goods vehicle (a vehicle of a construction primarily suited for the conveyance of goods or burden of any description), for example, a lorry. Estate cars and off-road recreational vehicles count as cars
- a motorcycle
- an invalid carriage, or
- a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used, e.g a Grand Prix racing car.
Definition of vanA van for the purposes of the company van benefit is defined as: -
- a vehicle that is primarily constructed for the conveyance of goods or burden of any description (not people!)
- with a design weight (that is “the weight which a vehicle is designed or adapted not to exceed when in normal use and travelling on a road laden”) that does not exceed 3,500kg
- is available for unrestricted private use by the employee/director
This definition rules out minibuses and lorries, but where do double cab pick ups fit into these definitions?
Double cab pick upsA vehicle of this sort normally has:
- a front passenger cab that contains a second row of seats and is capable of seating about 4 passengers, plus the driver
- four doors capable of being opened independently, whether the rear doors are hinged at the front or the rear (two door versions are normally accepted to be vans) and
- an uncovered pick-up area behind the passenger cab.
There is nothing about these vehicles that renders them unsuitable for private use, so it is necessary to consider whether they are designed primarily for carrying goods or burden.
The payload of the double cab pick up vehicle needs to be taken into account to ascertain whether it should be considered to be a car or a van for tax purposes. Under this measure, a double cab pick-up that has a payload of 1 tonne (1,000kg) or more is accepted as a van for benefits purposes. Payload means gross vehicle weight (or design weight) less unoccupied kerb weight (care is needed when looking at manufacturers’ brochures as they sometimes define payload differently).
Under a separate agreement between Customs and the Society of Motor Manufacturers and Traders (SMMT), a hard top consisting of metal, fibre glass or similar material, with or without windows, is accorded a generic weight of 45kg. Therefore the addition of a hard top to a double cab pick-up with an ex-works payload of 1,010 kg will convert the vehicle into a car (net payload reduced to 965 kg). Under this agreement, the weight of all other optional accessories is disregarded.
This 1 tonne rule only applies to double cab pick-ups and not to any other type of vehicle.
How emTax can help
As illustrated above employment tax can be very complicated and there are many grey areas where there is no definitive right or wrong answer. As experts in employment taxation, our consultants have years of experience of dealing and negotiating with HMRC to arrive at satisfactory outcomes for our clients.
If HMRC have already opened a line of enquiry or if you are worried about any potential employment tax issues facing your business, do not hesitate to get in touch with us for an informal chat of how we may be able to help you.