Companies and commercial fleet drivers are being warned not repurpose car-derived vans into more car-like vehicles to try to make savings in Benefit-in-Kind and vehicle taxation.
Burton-on-Trent fleet management firm, CBVC Vehicle Management, says it has been approached on several occasions by companies looking to repurpose vans as passenger carrying vehicles without incurring additional tax charges.
The theoretical tax savings are clear to see. As a van, the vehicle qualifies for:
Based on the scale charge, a driver paying 20% tax would have a tax bill of just £686 a year, compared to £1,372 for the 40% tax payer. There is also a flat-rate van fuel benefit charge of £655 for the same tax year.
A comparable company car will have a BIK tax bill many times greater than a van, with only 50% of the VAT on leasing rentals being recoverable and NIC being paid on the vehicle’s full scale charge based on its PIID value.
As a result, some companies may be tempted to “acquire a van
and then re-purpose it with rear seats, for example, while still claiming it as
a van and paying the appropriate van tax rates”.
“We have been asked this question on several occasions, by companies running what are clearly car-derived vans. But then, perhaps in response to dealer advertising or the wrong advice, they have sought to retro-fit items, such as rear seats, to turn them into what in the eyes of HMRC would be passenger cars.”
HMRC has a strict set of criteria that qualify a vehicle as a light commercial or car-derived van rather than a passenger car. It classifies a vehicle as a van where:
Full details can be found on www.gov.uk.