Van or car is three questions with three different answers, and double-cab pick-ups changed in 2025 with two transitional windows that do not run to the same date. Mileage also went up to 55p on 6 April 2026.
People treat this as a single classification. It is three, with three different legal tests and three different consequences, and they do not always agree with each other. HMRC stopped aligning its car and van definitions with the VAT definitions from 6 April 2025.
| Question | If it is a car | If it is a goods vehicle |
|---|---|---|
| Benefit in kind | Car benefit charge based on list price and CO2; car fuel benefit multiplier £29,200 for 2026/27 | Flat van benefit charge £4,170; van fuel benefit £798; nil where private use is restricted or insignificant |
| VAT input tax | Blocked on purchase | Recoverable on a commercial vehicle, subject to business use |
| Capital allowances | No Annual Investment Allowance, no full expensing — special rate or main pool by emissions | Annual Investment Allowance, full expensing or the 40% first-year allowance available |
The benefit in kind test now turns on the primary suitability of the vehicle's construction, following the Court of Appeal in Payne and others — the Coca-Cola case — rather than on the VAT classification or on payload alone. Class 1A National Insurance at 15% is due on the van and fuel benefit charges.
This is the item most often reported wrongly, and the reason is that the two changes have two different transitional windows.
| Benefit in kind | Capital allowances | |
|---|---|---|
| Effect | Most double-cabs are cars, on the primary suitability test | Most double-cabs are cars — so no Annual Investment Allowance and no full expensing |
| From | 6 April 2025 | 1 April 2025 for corporation tax; 6 April 2025 for income tax |
| Transitional protection | Purchased, leased or ordered before 6 April 2025 — old treatment until the earlier of disposal, lease expiry or 5 April 2029 | Contract entered into before commencement and expenditure incurred before 1 October 2025 |
HMRC's own examples make the benefit in kind rule concrete: purchased September 2025 is a car; leased December 2024 keeps the old rules until lease expiry or April 2029; and ordered January 2025 but not delivered until September 2025 keeps the old rules until April 2029, because the order date governs. Transferring the vehicle between employees during the transitional period does not break the protection, provided there is no disposal or lease expiry — but a new lease triggers car treatment.
The VAT treatment did not change. And pick-ups with a payload under one tonne are unaffected, because they were already cars, not being primarily constructed for the conveyance of goods.
| Allowance | Rate | Who |
|---|---|---|
| Annual Investment Allowance | 100% on up to £1,000,000 | Sole traders, partnerships and companies |
| Full expensing | 100%, uncapped, new and unused only | Companies only |
| New 40% first-year allowance | 40%, main-rate, new and unused only | All businesses, from 1 January 2026 |
| Main-rate writing-down allowance | 14% — cut from 18% | From 1 April 2026 (CT) / 6 April 2026 (IT), with hybrid rates for straddling periods |
The Annual Investment Allowance excludes cars, items owned for another purpose before being brought into the business, and gifted items, and is reduced proportionately for short accounting periods. Full expensing additionally requires the asset to be new and unused and not bought to lease to somebody else. For most trades the £1 million allowance absorbs the entire year's spend, which is why the 40% allowance matters mainly above that level — while the cut in the writing-down allowance to 14% affects everyone carrying a main pool.
Under the cash basis, cars are the exception on which capital allowances are still claimed; everything else you buy and keep for the business is claimed as an allowable expense. So a van and your tools are simply deducted.
The rate for cars and vans rose from 45p to 55p for the first 10,000 business miles. Above 10,000 miles it stays at 25p, motorcycles at 24p and bicycles at 20p. It applies to employee mileage payments and to the self-employed simplified rates alike, and the National Insurance disregard for relevant motoring expenditure rises to a flat 55p with it. For a trade business doing real mileage this is a material increase in what can be claimed, and it is worth checking that your records are good enough to claim it.
For benefit in kind and for capital allowances, most are now cars. HMRC applies a primary suitability test, and a double-cab is typically equally suited to carrying people and goods, so it has no predominant suitability and is treated as a car. The transitional rules differ, which is why so much of what is written about this is wrong. For benefit in kind, a vehicle purchased, leased or ordered before 6 April 2025 keeps the old van treatment until the earlier of disposal, lease expiry or 5 April 2029. For capital allowances the window is far shorter: a contract entered into before commencement, with the expenditure incurred before 1 October 2025. The VAT treatment did not change at all, and pick-ups under one tonne payload were already cars.
Not by itself. There is no van benefit charge where private use is restricted to business travel plus insignificant private use — and unlike a car, ordinary commuting in a van falls within that restricted private use condition. That is why a genuine work van driven home each night is usually tax-free, and it is also why the van-or-car classification matters so much: reclassify the same vehicle as a car and the commute becomes taxable. For 2026/27 the van benefit charge where private use is not restricted is £4,170, with £798 for van fuel, and Class 1A National Insurance at 15% is due on both.
A first-year allowance of 40% on main-rate plant and machinery, for expenditure incurred on or after 1 January 2026. The important part for a trade business is that it is available to all businesses, not just companies — unincorporated businesses can claim it, which full expensing never allowed. Second-hand assets are excluded, as are cars and overseas leasing. For most trades the Annual Investment Allowance still absorbs the whole spend, so the 40% allowance matters where annual capital spend exceeds £1 million.
Only if you are an employee. The flat rate expenses — £140 for joiners and carpenters, £120 for plumbers, heating and pipe fitters and for electricians, £80 for roofing felt and asphalt labourers, £60 for general labourers, £120 for other building workers — are available to employees and need no receipts. They are not available to the self-employed, who deduct the actual cost instead. If your employer already reimburses part of the cost that amount is deducted, and if they pay all of it no relief is due.
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