There has been a lot of publicity lately about the tax advantages of running cars with low CO2 ratings. There are a number of benefits:
- possible 100% first year tax deduction for the cost of the vehicle,
- much reduced benefit in kind charges,
- lower road fund tax and so on.
But not all of us want to run such vehicles even if there are tax, VAT and running cost advantages.
Double cab pickups, sometimes described as crew cab pickups, are an anomaly!
For business users, especially the self
-employed, they present an unusual tax opportunity.
The HMRC web site describes double cab pickups as:
“… a front passenger cab that contains a second row of seats and is capable of seating about 4 passengers, plus the driver with four doors capable of being opened independently (two door versions are normally accepted to be vans, even those with rear doors that can only be opened after the front doors and that must be closed before the front doors) and an uncovered pick-up area behind the passenger cab.”
From the tax year 2002 -03 onwards a double cab pickup is classified as a van for both VAT and benefits purposes if it has a payload of 1 tonne (1,000kg) or more.
If your double cab pickup meets this definition:
You can reclaim any VAT added to the purchase price, and
The net capital cost (after VAT has been reclaimed) could be available for a 100% first year tax allowance as part of your Annual Investment Allowance up to a maximum of £50,000 each tax year.
If you are a director or employee, any significant private use of the double cab pickup will trigger a standard benefit in kind charge of tax on £3,000 per year. In addition if your firm/employer provides fuel to cover private use of the vehicle there will be an extra benefit charge of tax on £500 per year at current rates. The best way to minimise any risk of these benefits being applied is to restrict the use of the pickup to business use only, or make sure that any private use meets the HMRC definition of “insignificant private use”.
If you would like more information regarding this article, or any advice regarding tax effective strategies for running your business vehicles please call.