As we approach the end of the tax year it would be good to consider the tax status of your car or van for the year just finished and the year ahead. After all, this affects tax and VAT.

The Revenue says that a car is any mechanically propelled road vehicle except:

1. A goods vehicle suited for the conveyance of goods or burden so estate cars and off-road recreational vehicles are cars;
2. A motorcycle;
3. An invalid carriage;
4. A vehicle of a type not commonly used and unsuitable so to be used, as a private vehicle.

A van is a vehicle of construction primarily suited for the conveyance of goods or burdens, not people.

Double Cab Pick Ups can be either. Where they have a payload of one tonne or more they are treated as goods vehicles (company vans) for BIK, capital allowance and VAT purposes. Otherwise, they are treated as cars and so for example you cannot reclaim the VAT.

Calculation of car benefit

If you are provided with a car by your employer, the taxable benefit is calculated by multiplying the car’s list price by a certain percentage.

The steps to calculate the taxable benefit are:

1. Find out the full list price of the car and accessories.
2. Add the price of non-business related accessories, excluding mobile phones;
3. Deduct any capital contribution you have made, up to a maximum of £5,000;
4. Find relevant percentages for cars based on CO2 emissions;
5. Multiply the figure in step 3 by the percentage in step 4;
6. Make deductions for periods of unavailability.
7. Make deduction for contributions you make for private use, if any;
8. Adjust if the car is shared between you and other employees.

List price

The list price can be reduced by any one-off contribution you make towards the capital cost, up to a maximum of £5,000.

List price means the manufacturer’s UK price, for a single purchase, not a dealer’s advertised price or price paid which may incorporate discounts and cashback from the list price

PLUS

1. standard accessories.
2. extra non-business essential accessories added, i.e. nonstandard, at their list price including fitting and VAT but excluding business-related accessories, mobile phone, and equipment for disabled drivers)
3. delivery charges plus VAT; and
4. VAT, car tax, duty but not road fund licence or new car registration fee.

For classic cars over 15 years old at the end of the tax year with a market value for the year of at least £15,000 the “list price” is taken as the market value. Market value is the price on the open market on the last day of the tax year the car was available to the employee.