When completing the annual expenses and benefits return (P11D) you need to know what company-provided vehicles each employee and director used in the tax year.

A problem can arise when deciding whether small commercial vehicles should be treated as vans or as cars. The difference can have a significant impact on the level of taxable benefit chargeable for the driver. For example pure electric vans currently attract a zero taxable benefit and the benefit assessed for using petrol or diesel vans was just £3,500 in 2021-22. On the other hand driving a company car can generate a taxable benefit of up to 37% of the list price of the vehicle per year.

HMRC has recently updated its guidance on how to tell the difference between a car and a van for tax benefit purposes.

Commercial vehicles are defined as those constructed primarily for the conveyance of goods or burden of any description. However if the vehicle is equally suited to carrying either goods or people it is a car. This ruling is particularly relevant to double-cap pick-ups or combi-vans.

It is the construction of the vehicle rather than its use that determines whether it should be treated as a van. Thus an estate car with blocked out side windows that is used for carrying tools is still a car as it is primarily designed to carry people. However if a vehicle has been adapted after leaving the factory that adaptation must be taken into account when deciding whether it is a car or a van.

Please talk to us about any vehicle that you feel is on the boundary of being a car or a van.