Capital Allowances on Second Hand Vans: A Guide for UK Businesses

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

Vans are plant and machinery for capital allowances purposes, not cars. This matters because the CO2-based pool restriction that applies to cars does not apply to vans. A second hand van goes straight into the main rate pool regardless of its CO2 emissions or whether it is diesel, petrol or otherwise.

The main rate writing down allowance (WDA) is 18% per year for accounting periods ending on or before 31 March 2026 (companies) or 5 April 2026 (income tax), reducing to 14% per year from 1 April 2026 (companies) / 6 April 2026 (income tax), following Finance Act 2026 s.28. In both cases it is a reducing-balance deduction on the pool balance.

Example: You buy a second hand van for £12,000 in a 2026/27 accounting period. In year one, you claim £1,680 (14% of £12,000). The remaining balance is £10,320. In year two, you claim £1,444.80 (14% of £10,320). The balance reduces each year.

In practice, most businesses claim the Annual Investment Allowance (AIA) on van purchases rather than carrying the cost into the WDA pool, giving 100% relief in the year of purchase.

When Does a Van Go Into the Special Rate Pool?

Unlike cars, vans are not assigned to the special rate pool based on CO2 emissions. A second hand van always goes into the main rate pool (WDA 14% from April 2026). The special rate pool (WDA 6%) applies to integral features, long-life assets, and high-CO2 cars. It does not apply to vans.

The one exception is a brand new zero-emission goods vehicle, which qualifies for a 100% first-year allowance. A second hand electric van does not qualify for the 100% FYA, but it still goes into the main rate pool (not the special rate pool) and is eligible for the AIA.

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 main rate pool at 14% WDA (from April 2026), the same pool as any other second hand van.

However, you are not limited to the WDA for a second hand electric van: the Annual Investment Allowance (AIA) is available and gives 100% relief in the year of purchase.

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: a van goes into the main rate pool regardless of its CO2 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 £4,020 (standard) plus £769 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. All second hand vans go into the main rate pool. Unlike cars, vans are not subject to CO2-based pool assignment: there is no CO2 test that sends a van to the special rate pool. If you have seen advice suggesting otherwise, it confuses the car regime with the van regime.

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 and a mileage log if there is any private use. Unlike cars, vans do not require a CO2 certificate for capital allowances. Without adequate records, 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.

At Holloway Davies, 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.