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Vans & commercial vehicles

Can I claim it?

Sole traderYesGenerally allowable
Limited companyYesGenerally allowable
EmployeeNoNot normally claimable

Last checked 27 September 2026 · HMRC source

Vans, lorries and other commercial vehicles are treated as plant and machinery for capital allowances purposes — not as cars. This matters enormously: commercial vehicles qualify for the Annual Investment Allowance (AIA), so the full purchase cost (up to £1 million) can typically be deducted against profits in the year of purchase. Cars are specifically excluded from the AIA and written down much more slowly.

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Conditions

  1. Vans and commercial vehicles qualify for the Annual Investment Allowance (AIA). The AIA allows a business to deduct up to £1 million of qualifying plant and machinery expenditure in the accounting period it is bought. Because most van purchases are well below this limit, businesses can usually deduct the entire purchase cost in year one — a stark contrast with cars, which are barred from the AIA entirely.
  2. For limited companies purchasing vans, full expensing (100% first-year allowance on main-rate plant) has been available for expenditure incurred on or after 1 April 2023 and is now permanent. Full expensing gives the same result as the AIA for a company buying a van: 100% relief in the year of purchase, with no cap. Sole traders and partnerships cannot use full expensing but can use the AIA up to £1 million.
  3. A 40% first-year allowance (FYA) is available for qualifying expenditure incurred on or after 1 January 2026 on plant or machinery that is new and unused and is not special rate expenditure (section 45U CAA 2001). It is open to businesses within the charge to Corporation Tax or Income Tax alike — companies, sole traders and partnerships. Expenditure on a car does not qualify, and the other general exclusions from first-year allowances in section 46(2) CAA 2001 apply, although the exclusion for plant or machinery provided for leasing is disapplied for the 40% FYA in certain circumstances. In practice, since AIA (100%) and full expensing (100% for companies) are almost always more beneficial, the 40% FYA is mainly a fallback where the AIA has been exhausted in a period.
  4. Where neither the AIA, full expensing nor 40% FYA is claimed, residual value goes into the main capital allowances pool. The main pool writing-down allowance (WDA) is 14% per year from 1 April 2026 for Corporation Tax and 6 April 2026 for Income Tax (reduced from 18%), with a hybrid rate for chargeable periods that span those dates.
  5. Sole traders and partnerships must restrict any capital allowances to reflect the business proportion of use. A van used exclusively for work (for example, a dedicated tool-carrying vehicle never used for personal journeys) can be claimed in full. Mixed-use vehicles require an apportionment.
  6. Sole traders and partnerships using the cash basis (ITTOIA 2005 Part 2 Chapter 3A) deduct the cost of a van as an ordinary allowable business expense in the period it is paid, rather than claiming capital allowances — effectively 100% relief without needing to navigate the AIA or pool rules. Cars are the exception: a car bought for the business is still claimed as a capital allowance under the cash basis.
  7. HMRC's definition of a van matters, because the vehicle must not be a 'car' within the meaning of section 268A CAA 2001. For capital allowances a car is a mechanically propelled vehicle other than a motorcycle, a vehicle of a construction primarily suited for the conveyance of goods or burden of any description, or a vehicle of a type which is not commonly used as a private vehicle and is not suitable for use as a private vehicle. HMRC's guidance is that where a vehicle is designed and marketed as a multi-purpose vehicle it is likely to be a car, and that where a vehicle is constructed or adapted for more than one purpose and neither purpose predominates it is likely to be a car. A conventional panel van is plainly a goods vehicle; dual-purpose vehicles are where claims fail. If a vehicle's classification is uncertain, seek specific advice before claiming AIA.
  8. Double-cab pick-ups are treated separately again for benefit-in-kind purposes, under a different rule with its own transitional. From 6 April 2025 HMRC no longer aligns its interpretation of 'car' and 'van' with the payload test used for VAT, and from that date most double-cab pick-ups are expected to be classified as cars when calculating the benefit charge, because these vehicles are typically equally suited to convey passengers and goods and have no predominant suitability (EIM23151). Where the vehicle counts as a car for this purpose, a car benefit charge applies instead of the van benefit charge described below, and it is usually the larger of the two. The benefit-in-kind transitional is not the capital allowances transitional: an employer that purchased, leased or ordered a double-cab pick-up before 6 April 2025 can rely on the previous treatment until the earlier of disposal, lease expiry, or 5 April 2029.
  9. Where a company makes a van available to an employee for private use, a van benefit charge can arise on the employee, with a Class 1A National Insurance liability on the employer. The charge is not automatic. Section 155(1A) ITEPA 2003 provides that 'If the restricted private use condition is met in relation to the van for the tax year, the cash equivalent is nil.' That condition is met where two requirements are both satisfied: the commuter use requirement, which needs the terms on which the van is available to 'prohibit its private use otherwise than for the purposes of ordinary commuting or travel between two places that is for practical purposes substantially ordinary commuting' and the employee to keep to those terms (section 155(5)(a), EIM22800); and the business travel requirement, which needs the van to be available mainly for the employee's business travel (EIM22805). So a van taken home each night, on terms allowing no private use beyond ordinary commuting, carries a nil charge — HMRC works that exact case through at EIM22870. The commuter use requirement can also be missed to an insignificant extent and the condition still be met for the year (section 155(4)(a)), so ordinary commuting plus insignificant other private use still gives a nil cash equivalent. Ordinary commuting is private use in HMRC's taxonomy — 'any use other than for the employee's business travel' (EIM22740) — but it is precisely the private use this condition permits, so it does not by itself produce a charge.
  10. Separately from the restricted private use condition, nothing has to be reported or paid where the van is used only for business journeys or as a pool van, and a van whose private use in the year is insignificant stays outside the charge altogether (EIM22745). Where a charge does arise it is reported on form P11D for 2026/27, but that is changing: from April 2027 mandatory payrolling applies to vans and van fuel, so the benefit will be reported through payroll software and Real Time Information rather than on a P11D. All of this is independent of the capital allowances claimed on the van's purchase — the company still claims the full allowance regardless.
  11. An employee who buys a van themselves cannot claim capital allowances on it. Section 36(1) CAA 2001 provides that where the qualifying activity is an employment or office, expenditure on the provision of a mechanically propelled road vehicle, or a cycle, is not qualifying expenditure. HMRC applies that to vans by name and states that the only way an employee can get tax relief for using their own vehicle for work is by a deduction for mileage allowance relief (EIM36750).

Common mistakes

  • Assuming a vehicle qualifies as a van without checking HMRC's definition — car-derived vans, crew-cab vehicles and double-cab pick-ups may be classified as cars, losing AIA eligibility.
  • Failing to restrict the AIA or WDA for a sole trader's mixed private-and-business van.
  • Treating a van purchase under cash basis the same as under traditional accounting — under cash basis, a van is simply expensed when paid; capital allowances are not required.

What to keep

  • Purchase invoice confirming the vehicle type, registration number and price.
  • V5C registration document or manufacturer specification confirming the vehicle is classified as a goods vehicle (not a car).
  • Business mileage or usage records if the vehicle is also used privately.

Real-world example

A self-employed electrician buys a new transit-style van for £28,000 in September 2026, used entirely for work. He claims the AIA and deducts the full £28,000 from his trading profits in 2026/27. Had he bought a petrol car of the same price emitting 130g/km, it would fall into the special rate pool at 6% WDA (£1,680) in year one — and would receive no AIA at all.

Frequently asked

Can I claim the full cost of a van in the year I buy it?
Yes, in most cases. Vans qualify for the AIA, which lets you deduct the full purchase cost (up to £1 million per accounting period) against profits in the year of purchase. Limited companies can alternatively use full expensing, which has no cap. Cars, by contrast, are excluded from both the AIA and full expensing.
Is a double-cab pick-up truck treated as a van for AIA purposes?
Usually not, any more. For expenditure incurred on or after 1 April 2025 for Corporation Tax and 6 April 2025 for Income Tax, HMRC no longer interprets the definition of a car as excluding double-cab pick-ups with a payload of one tonne or more, and says most, if not all, double-cab pick-ups will be classified as cars — so they do not qualify for the AIA or full expensing. Expenditure incurred before those dates kept the old treatment, and a transitional rule preserves it where the expenditure results from a contract entered into before 1 April 2025 (Corporation Tax) or 6 April 2025 (Income Tax) and is incurred before 1 October 2025. Double-cab pick-ups with a payload under one tonne were already treated as cars and are unaffected. The benefit-in-kind rule is a separate one with a different commencement and a different transitional — see the next question.
Is a double-cab pick-up still a van for the benefit charge?
Usually not, from 6 April 2025. HMRC no longer aligns the tax definitions of 'car' and 'van' with the one-tonne payload test used for VAT, and from that date most double-cab pick-ups are expected to be classified as cars when calculating the benefit charge, because they are typically equally suited to convey passengers and goods with no predominant suitability. Where that applies, a car benefit charge replaces the van benefit charge. Do not assume the capital allowances answer carries across: the two changes have different dates and different transitional rules. For the benefit charge, an employer that purchased, leased or ordered the vehicle before 6 April 2025 can rely on the previous treatment until the earlier of disposal, lease expiry, or 5 April 2029. The capital allowances side instead turns on when the expenditure is incurred, and section 5 CAA 2001 fixes that as the date an unconditional obligation to pay arises — not the date the money is paid, because the general rule applies even where the amount is not required to be paid until a later date. Where payment is not required until more than four months after that obligation arises, the expenditure is treated as incurred on the date payment is required instead. HMRC's position is that a buyer of goods is legally required to pay on delivery unless the contract says otherwise, so the obligation usually becomes unconditional on delivery. So a pick-up ordered in January 2025 on which the unconditional obligation to pay did not arise until November 2025 falls outside the capital allowances transitional, which covers only expenditure incurred before 1 October 2025, and is a car for capital allowances while still being a van for the benefit charge. Had the obligation to pay become unconditional in January 2025, the expenditure would have been incurred then — before the revised interpretation applied at all — so a payload of one tonne or more would have kept van treatment on both sides.
My company gives a van to an employee who also uses it for personal trips — does this affect the capital allowances?
No — the company continues to claim its capital allowances on the van in full. Whether the employee faces a benefit charge is a separate question with its own answer: if the terms on which the van is available allow no private use beyond ordinary commuting and the employee keeps to them, the cash equivalent is nil. Where a charge does arise it brings an employer Class 1A NIC liability with it. Neither outcome affects the capital allowances calculation.
I am an employee and I bought a van for my job. Can I claim capital allowances?
No. Where the qualifying activity is an employment or office, expenditure on a mechanically propelled road vehicle is not qualifying expenditure for capital allowances, and HMRC names vans specifically. The route to relief for using your own vehicle for work is mileage allowance relief instead.

How the tax relief on this actually works: capital items like this are usually claimed through capital allowances, not as an everyday running cost. Capital allowances explained →

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Related allowances

Source: HMRC guidance

This page is general information based on HMRC published guidance, not tax advice. Status shown is a plain-English summary — your own position can differ. Always check the HMRC source above and speak to a qualified accountant before making a claim.