Direct tax rules are changing in April 2025 and more vehicles are being classed as cars rather than commercial vehicles. VAT is not claimable when buying a new car, however it can be claimed when a car will be used as a tool of trade (e.g. a car hire business, driving school or taxi firm). Input tax can also be claimed on a genuine car that is used for carpooling and made available for use by all staff and not kept overnight at an employee’s home.
Input tax can be claimed on a purchase of a commercial vehicle which has three/four wheels (no motorbike!), has been constructed solely/mainly to carry passengers and has roofed accommodation to the rear of the driver’s seat with side windows. Put simply, if it can carry either only one passenger, or over twelve passengers it is not a car and so it does not count.
Like most things, there are exceptions to this rule. If the vehicle has an unladen weight of three tonnes or more it will always be classed as a commercial vehicle. Caravans, ambulances and prison vans are commercial vehicles. If you are planning to purchase a car, van or combi-van, it is worth checking out if it is a commercial vehicle.
Get in contact today on 01622 738165 and we can advise you on what would be best for you and your business.