What taxes apply when buying a new van as a UK business?

When buying a new van as a UK business, you’ll typically be subject to Value Added Tax (VAT) and Vehicle Excise Duty (VED). However, as a business, you can generally claim back the VAT, providing the van is used exclusively for business purposes.

Value Added Tax (VAT)

In the UK, VAT is usually applied to new vans at a standard rate of 20%. For example, if you’re purchasing a new van priced at £20,000, the VAT will be £4,000. However, if you’re VAT registered, you can claim this back on your quarterly VAT return. Note that to do so, the van must be used solely for business – if there’s any personal use, you may not be able to reclaim the full amount.

Vehicle Excise Duty (VED)

VED, often referred to as road tax, is another cost to consider. When buying a new van under 3500kg, there is a flat annual rate of £345 per year regardless of emissions. For older vans you need to refer to the VED guidelines which can be found at UK Government VED Rules

Benefit-in-Kind (BiK)

Another tax to consider is the Benefit-in-Kind (BiK) tax. This is applicable if the van is given to an employee for personal use. The BiK rate is currently a flat rate per year, but this may change in the future.

In conclusion, while purchasing a new van as a UK business involves several taxes, there are also opportunities to reclaim some of these costs. Each business’s situation will vary so it’s always worth seeking professional advice to understand the exact tax implications for your business.

Note: The figures and tax bands mentioned are current at the time of writing and may vary over time, so always check the most recent rates.