Car or Van? – HMRC Rules

The HMRC rules determining whether a vehicle is a Car or Van are fairly complex. The comments below are the guidance provided by HMRC and we have provided a link at the bottom of the blog to the HMRC website for more information. Please contact the Helpful Bean Counter if you want to discuss any issues contacted with this blog? 

There are several tax areas which rely on being able to determine whether a particular vehicle is classified as a car or a van:

  1. Benefits in kind, where car and fuel benefits are linked to a scale of CO2 emissions, whereas vans are on flat rates.

  2. Capital allowances, where vans qualify for annual investment allowance, whereas cars enter the main or special pools and qualify for writing down allowance only. Cars with qualifying emissions not more than 75g/km are entitled to 100% first year allowance.

VAT where input tax can be claimed on vans but not on cars (except in some very specific circumstances).

Car benefit definitions

Every mechanically propelled vehicle is a car, unless it is:

  1. a goods vehicle

  2. a motor cycle (essentially a vehicle with less than four wheels)

  3. an invalid carriage

  4. a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used

A goods vehicle is defined as a vehicle of a construction primarily suited for the conveyance of goods or burden of any description (excludes people). The test is of construction, not use. It is only if the primary purpose for which the vehicle is constructed is the carriage of goods that it will escape from being a car.

For benefit tax/NIC and VAT purposes, one must look at the construction at the particular time in question (time of transaction or in relevant tax year). VED is based on type approval at the time the vehicle is first registered.

A vehicle whose design weight exceeds 3,500kg is not a van, but a heavy goods vehicle.

Double cab pick-ups

These vehicles were very popular a few years ago when the van benefit in kind was much lower than the car benefit. The substantial increase in van benefit from April 2007 made this less of an issue, but there are still potential savings to be made. On the surface many double cab pick-ups appear to be equally suited to convey passengers or goods. However, when all factors relating to their construction are taken into account, a number of vehicles within this category do have a predominant purpose of carrying goods or burden. Each case will depend on the facts and exact specification. As a general rule, HMRC accepts that a double cab pick-up with a payload of 1 tonne (1,000kg) or over is a van for benefit purposes. The 1 tonne rule applies only to double cab pick-ups, not to any other vehicle.

Capital allowances definition
This is almost identical to the benefits definition. Hire cars, taxis and driving school instructor cars are specifically included in the definition of cars.

VAT input tax recovery

VAT rules say that a car is any motor vehicle of a kind normally used on public roads. It must have three or more wheels and meet one of the following conditions:

  1. It must be constructed – or adapted – mainly for carrying passengers.

  2. It must have roofed accommodation behind the driver’s seat.

( The above either fitted with side windows already or be constructed so side windows can be fitted)


In addition, the following are not cars for VAT purposes:

  1. vehicles capable of accommodating only one person or suitable for carrying twelve or more people including the driver

  2. caravans, ambulances and prison vans

  3. vehicles of three tonnes or more un-laden weight

  4. special purpose vehicles, such as ice cream vans, mobile shops, hearses, bullion vans, and breakdown and recovery vehicles

  5. vehicles with a payload of one tonne or more

Problem car-derived vans?

These vehicles, from the outside, still maintain the appearance of a car. However, from the interior the vehicles have the appearance and functionality of a van – the rear seats and seatbelts have been removed along with their mountings, the rear area of the shell is fitted with a new floor panel to create a payload area and the vehicle’s ‘side windows’ to the rear of the driver’s seat are made opaque. Such vehicles will be classified as vans, but all the criteria are very strictly applied.

Vans with rear seats

Some vehicles look like vans and don’t have windows in the sides behind the driver. But they do have additional seats for carrying passengers behind the front row of seats (or they’re designed so they can be fitted with them). They’re sometimes known as combination vans or combi-vans. HMRC considers that this type of vehicle is a commercial vehicle for VAT purposes if it meets either of the following conditions:

  1. It has a payload of more than one tonne after the extra seats have been added.

  2. The dedicated load area (the load area that’s completely unaffected by the extra seats) is larger than the passenger area. 

If it meets either of these conditions, then the vehicle is a commercial vehicle for VAT purposes and you can reclaim the input VAT if you follow the normal rules for reclaiming VAT.

HMRC has produced a list of car derived vans and vans with rear seats showing whether they’re classed as a van (commercial vehicle) or a car for VAT purposes: HMRC Link

Alternatively please contact us at the Helpful Bean Counter

5 thoughts on “Car or Van? – HMRC Rules

  1. Hi . Im a full time private landlord self employed. I need a van to carry out repairs and maintenance on my properties. There is alao an element of private use. So i need seats in the back. Can i buy a crewcab or a kombi van like a ford transit custom kombi or Mercedes vito dualliner and claim 100% annual investment allowance.

    1. Philip. As you are self employed, then any vehicle that you run through your business would either be reimbursed through a HMRC agreed mileage allowance, or the cost of running your vehicle would be apportioned by your private and business mileage. The Blog is for Directors or employees of Limited Companies. Also if you are not a full time landlord (ie self employed), then the only vehicle cost allowable would be the mileage allowance. You can get capital allowances on the purchase of a vehicle, although they would be apportioned. I hope this helps?

  2. When a large group of people is going to the same round trip, we spend on two or more small cars , which means the value can be multiplied by the number of cars. If we choose to rent a 12 passenger van or a 15 passenger van, we can avoid the car rental amount.

    1. Unfortunately the rules don’t apply to short term rentals. The passenger van may still be a good decision for your business.

  3. Hi Martin, I’m a director of a limited company. I’m about to purchase a car derived van. Estimated business mileage 15k per year. Potential private mileage maybe 2k per year. Would you recommend buying this through the company or buying privately and charging the company for business miles?

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