If you are looking to save money as a small business, you’ll need to know about every loophole in the book from tax reliefs to clever workarounds. As a business owner, you may be aware of the fact that there is tax allowance for Ltd businesses that allows the business to claim 100% of the capital purchase (e.g. a vehicle) against Corporate Tax. This means that you can claim back the value of a commercial vehicle for your business. This is a great way for small businesses to grow their commercial fleet and expand their business potential.
What is a commercial vehicle?
That begs the question though, what is a commercial vehicle? The answer isn’t quite as simple as it might sound and there is a bit of discrepancy in what is considered a commercial vehicle but to put it simply, commercial vehicles are defined by HMRC guidelines. HMRC places vehicles into different categories, which often has implications for the amount of taxes paid on the vehicle.
The HMRC definition of a commercial vehicle is as follows:
- Weighing at least 3.5 tonnes or more
- Able to haul at least one tonne of cargo
- For business purposes
Under this definition, lorries, vans, tractors, pickup trucks, and “car-derived vans” are all considered commercial vehicles. A car-derived vehicle is basically a van that’s designed to look like a car and in order to reduce people cheating the system, it is defined as a vehicle that :
- Have a laden gross weight of 2 tonnes
- Be built on a platform designed to build vans by the same manufacturer
- Not have back seats or windows, to discourage human transport – if it must have windows, they must be opaque or tinted
- Not have floor panels – they can only feature loading bays
A full list of car-derived vehicles can be found here as provided by Gov UK : https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/428510/Car_derived_Van_updateMay2015.pdf
Why would you want a car-derived van?
Even ignoring the tax benefits potentially provided by a car-derived van, they also have a high number of advantages over normal cars and commercial vans. They have the advantage of looking more stylish than most other vans, and they frequently offer higher levels of comfort and standard equipment. They are identical to the cars they are based on in every aspect up front, including how they drive. They therefore represent a safer option for folks who have never operated a large commercial vehicle but desire something more substantial than a car with flat-folded seats.
What’s the best car-derived van for my business?
It really depends on what your business wants. Car-derived vans are a totally different beast and what you want could be completely different to other businesses. Do you want a van that provides the comfort and usability of a car? Or do you want a car that has some of the storage and durability of a van?
If you want to buy one straight out of the factory, there are currently limited options available. Presently, there are just two on sale: the Toyota Corolla Commercial and the newly launched Dacia Duster Commercial. If you are looking for something a bit bigger, the van versions of the Land Rover Defender and Discovery and the Toyota Land Cruiser Commercial are classified as commercial 4x4s but would still allow you the basic tax benefits you are after.
There should still be plenty of the more popular types, such as the Renault Zoe van, available on the used market still and this may be your best bet in terms of securing a low cost commercial vehicle for your business. These vans have been fairly popular but have seen short factory lifespans so the main way to get at these car-derived vans is through the second hand market.
Securing a cheap vehicle for your business can be a great way to build out your business and reduce the level of investment you need to grow your business. Car-derived vans are an unusual beast but they are a brilliant way to secure tax allowance and help staff who might be unfamiliar with driving larger commercial vehicles such as vans.