Can You Claim Capital Allowances on a Second Hand Van?

Yes, you can. If your business buys a second hand van for business use, the cost qualifies for capital allowances. This applies whether you are a sole trader, a partnership, or a limited company.

The key question is not whether you can claim, but how much you can claim and in which year. The answer depends on the van's CO2 emissions, the date you bought it, and whether it is brand new to you (even if second hand generally).

Capital allowances let you deduct the cost of certain assets from your taxable profits. For a van, you spread the relief over several years unless you qualify for a 100% first year allowance.

What Counts as a Van for Capital Allowances?

HMRC defines a van as a goods vehicle with a design weight not exceeding 3,500 kg. It must be primarily designed for carrying goods, not passengers. A standard panel van, a crew cab van with a load bed, or a pickup truck all count.

Double cab pickups are a grey area. HMRC historically treated them as cars for capital allowances and benefit in kind purposes. From 1 July 2024, the rules changed. A double cab pickup with a payload of one tonne or more is now treated as a goods vehicle (a van) for capital allowances and BIK. This is a significant change for businesses using vehicles like the Ford Ranger or Toyota Hilux.

If you bought a double cab pickup before 1 July 2024, the old rules apply. Check with your accountant if you are unsure.

Main Rates for Second Hand Vans

There are two main capital allowance pools for vans: the main rate pool (18% per year, reducing balance) and the special rate pool (6% per year, reducing balance).

Most second hand vans go into the main rate pool. You claim 18% of the cost in year one, then 18% of the remaining balance in year two, and so on. This is called the writing down allowance.

Example: You buy a second hand van for £12,000. In year one, you claim £2,160 (18% of £12,000). The remaining balance is £9,840. In year two, you claim £1,771.20 (18% of £9,840). The balance reduces each year.

If the van has CO2 emissions over 50g/km and was first registered before April 2021, it goes into the main rate pool. Most diesel vans fall here.

When Does a Van Go Into the Special Rate Pool?

A second hand van goes into the special rate pool (6%) if it has CO2 emissions of 50g/km or less. This is rare for a second hand van. It would need to be an electric van or a very low emission plug-in hybrid.

Electric vans are increasingly common second hand. If you buy a used electric van, it qualifies for the special rate pool at 6% per year. But there is a better option for electric vans, which we cover next.

100% First Year Allowance for Electric Vans

If you buy a brand new electric van, you can claim 100% first year allowance. You deduct the full cost from your taxable profits in the year of purchase. This applies to zero-emission goods vehicles.

For a second hand electric van, the 100% first year allowance does not apply. The van must be unused and not previously owned by anyone else. A used electric van goes into the special rate pool at 6%.

However, there is a separate relief for second hand electric vans: the Annual Investment Allowance (AIA).

Using the Annual Investment Allowance on a Second Hand Van

The Annual Investment Allowance (AIA) gives you 100% tax relief on most plant and machinery, including vans, up to a £1,000,000 annual limit. This applies to both new and second hand assets.

If you buy a second hand van for £15,000, you can claim the full £15,000 against your taxable profits in the same year, provided you have not used your AIA on other assets.

The AIA is available to most businesses. Sole traders, partnerships, and limited companies can all use it. There are some exclusions: cars (not vans), assets used partly for non-business purposes, and assets given to you or bought from a connected person.

If you buy a van from your spouse or your own company, the AIA does not apply. You claim writing down allowances instead.

Example: A Manchester-based plumbing contractor buys a second hand van for £18,000. He has not used any AIA this year. He claims the full £18,000 against his profits. His tax saving at 20% is £3,600. At 40%, it is £7,200.

What About Vans Bought Before You Started Trading?

If you bought a van before you started your business, you can still claim capital allowances. You treat the van as brought into your business at its market value on the day you started trading.

You need a valuation. A reasonable estimate based on a trade guide like CAP or Parkers is acceptable. Keep a record of how you arrived at the figure.

You then claim capital allowances on that market value, not what you originally paid. The same rules apply: main rate pool or special rate pool depending on emissions.

Private Use of a Business Van

If you use the van partly for private journeys, you must restrict your capital allowance claim. Only the business use proportion qualifies.

Example: You buy a second hand van for £10,000. You use it 70% for business and 30% for private travel. You claim capital allowances on £7,000 (70% of £10,000).

Keep a mileage log. HMRC may ask for it. If you cannot demonstrate the business proportion, they may disallow the claim entirely.

For limited company directors, private use of a van also triggers a benefit in kind charge. The van benefit charge for 2025/26 is £3,960 (standard) plus £757 if the employer provides fuel for private use. This is separate from the capital allowance claim.

Pooling and Disposals

When you sell or dispose of a van, you adjust the capital allowances. If the sale proceeds are less than the tax written down value, you claim a balancing allowance for the difference. If the proceeds are more, you pay a balancing charge (added to your profits).

If you sell the van for more than you paid, you may have a capital gain. But vans are usually exempt from capital gains tax as wasting assets (expected life under 50 years).

If you trade in a van for a new one, the disposal proceeds are the trade in value. The new van's cost is the net price after the trade in.

Common Mistakes to Avoid

Claiming on the wrong pool. Most second hand vans go into the main rate pool. Only low emission vans (50g/km or less) go into the special rate pool. Double check the CO2 figure.

Forgetting the AIA. Many business owners claim writing down allowances when they could claim 100% relief through the AIA. If you have AIA available, use it on the van.

Not keeping records. You need the purchase invoice, the CO2 emissions certificate, and a mileage log if there is any private use. Without these, your claim is vulnerable.

Claiming on a car disguised as a van. Some vehicles marketed as vans are actually cars for tax purposes. The key test is the design weight and the primary purpose. A vehicle with rear seats and windows that is clearly designed for passengers is a car, not a van.

How Holloway Davies Can Help

Capital allowances on second hand vans are straightforward in most cases, but the rules have nuances. The double cab pickup change in July 2024 caught many businesses out. The distinction between main rate and special rate pools matters for your cash flow.

As ICAEW qualified accountants, we review your asset purchases and ensure you claim the right relief in the right year. We also check that your capital allowance claims align with your overall tax position, including any other tax reliefs you may be entitled to.

If you are buying a van for your business, or if you have bought one in the last two years and want to check your claim, get in touch. We can review your records and maximise your relief.

For more on related topics, see our corporation tax blog and bookkeeping and compliance blog.