Combi-vans are seen as a great way to cover both business and family vehicle needs while keeping benefit in kind costs low.
But whether or not a vehicle qualifies for lower this tax is actually not so straightforward, and a court case between HMRC and Coca-Cola in 2017 didn’t do much to clear things up.
Of the three combi-vans under dispute, two were ruled to be cars, triggering significant benefits in kind for the employees.
HMRC does have a list of car-derived vans and combi-vans available through its website, but it is out of date and far from complete.
When trying to distinguish which category your vehicle will belong to, there are several factors to consider. These include, but are not limited to:
- The vehicle’s primary purpose, bear in mind if there is no primary purpose it will be treated like a car
- The vehicle’s payload
- Windows in the back with the second row of seats
- Modifications to the vehicles including bulkheads
HMRC has conflicting legislation on the treatment of these vehicles for VAT purposes, as they do for direct taxes, which means you could still be able to claim the VAT on purchase. However, you may find you have a significant benefit in kind triggered by the high list price and CO2 emissions and you will lose out on the Annual Investment Allowance.
Our advice is to avoid entering into any agreements for a combi-van without first seeking professional advice. The tax costs of the wrong decision can be hefty.
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