Fleet News

Drivers slash tax bills by opting for 'vans'

A FIRM of chartered accountants claims clients are successfully cutting their company car tax bills by switching to off-roaders that have been converted to vans.

Van-style versions of the Land Rover Freelander and the Land Rover Discovery are being used as cars, but because they are classed as vans, drivers only pay tax on a £500 standard charge.

For a 22% taxpayer that equates to a weekly tax bill of £2.50, regardless of the type and cost of the 'van'.

The Inland Revenue is fighting to end confusion over the classification of van-style vehicles, as they bridge the gap between the car and van market.

Roy Maugham, partner at the London office of Hacker Young chartered accountants, said drivers were taking a 'calculated risk' by moving to such vehicles, as there was a danger the Inland Revenue could close down the loophole. A company van is classed as one built primarily to carry goods or other loads, with a design weight of up to 3.5 tonnes.

The Inland Revenue states: 'It does not include vehicles such as cars, estates or minibuses, built primarily to carry people.'

So-called double cabs have also been at the centre of a taxation row, as vehicles with a payload of more than one a tonne are classed as vans by Customs & Excise, allowing VAT on their purchase price to be recovered, but the Inland Revenue says they could be cars or vans depending on how they are used.

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