What to consider
- Car or van? Vans usually qualify for the annual investment allowance and reclaimable VAT. Cars are relieved more slowly and VAT is usually blocked.
- How you buy it. Outright, hire purchase or lease each have different tax and VAT treatment.
- Company car benefit in kind. A company car available for private use is a taxable benefit, based on the car value and emissions.
- Mileage versus actual costs. Sole traders can often claim simplified mileage instead of actual running costs, whichever is better.
About to buy a vehicle?
The wrong choice can cost thousands in lost relief or an unexpected benefit in kind. TaxTune models the options for your situation so you buy in the most tax efficient way.
Let us get the vehicle tax right
We advise on car versus van, how to buy, the VAT and any benefit in kind, and claim the relief you are due. Fixed fee.
Frequently asked questions
Can I claim tax relief on a business vehicle?
Yes, but it depends on the vehicle. Vans usually qualify for the annual investment allowance, while cars are relieved more slowly through writing down allowances based on emissions.
Can I reclaim VAT on a business vehicle?
VAT on a van used for business is usually reclaimable. VAT on a car is usually blocked if it is available for private use, with limited exceptions such as genuine pool cars.
What is a company car benefit in kind?
A company car available for private use is a taxable benefit for the driver, based on the car value and its emissions, reported on a P11D and taxed through the tax code.
Should I buy the car personally or through the company?
It depends on the car and your mileage. For many low mileage cars, personal ownership with a mileage claim is more efficient than a company car and its benefit in kind.
What is the mileage claim?
Sole traders and employees can often claim a set rate per business mile instead of actual running costs, which is simpler and sometimes more generous.