Can I claim buying a van or a car?
A van, yes: under the cash basis it is an expense in the year you pay for it. A car, differently: its cost is claimed through capital allowances at a rate set by its CO2 emissions, or it sits inside HMRC's flat mileage rate. Here is the line between the two, the current rates, the private-use share, and what happens when you sell.
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Van or car: why it matters
A van is an expense
Gov.uk's rule for the cash basis is that a car is claimed as a capital allowance, and every other type of vehicle, a van, a lorry or a motorcycle, is claimed as an allowable expense in the year you pay for it, whatever it cost. Only the business share, if you also use it privately.
A car is capital allowances
A car bought for the business is the one piece of equipment the cash basis will not expense. Instead you claim capital allowances, a percentage of its value each year set by its CO2 emissions, or you use the flat mileage rate, in which case the cost of the car is inside the rate and nothing else is claimed for it.
What counts as a car
For capital allowances a car is a vehicle suitable for private use, of a kind most people use privately, and not built for transporting goods. Vans, lorries and trucks are not cars; nor are motorcycles. Since 6 April 2025 HMRC treats most double cab pick-ups as cars, because they carry passengers as readily as goods.
Choose once per vehicle
If you use the flat mileage rate for a vehicle you must keep using it for as long as that vehicle is in the business, and you cannot use the rate for a vehicle whose cost you have already claimed, as an expense or through capital allowances. The choice is made in the first year you use the vehicle.
The rates and which journeys count: can I claim mileage.
Capital allowances on a car
Which rate you get depends on when you bought the car and its CO2 emissions. For a car bought since April 2021: a new and unused car with emissions of 0g/km, which includes a new electric car, qualifies for a 100% first-year allowance, so the whole cost comes off in the year you buy it, provided it is bought before April 2027. A second-hand electric car, or any car with emissions of 50g/km or less, gets the main rate: 14% of the remaining value each year from 6 April 2026, 18% before. A car over 50g/km gets the special rate of 6% a year.
Cars never qualify for the annual investment allowance that gives the full cost of a van or a machine in the first year, and a hybrid does not get the 100% allowance, because its engine produces CO2. If you also use the car privately, gov.uk says to work out what you can claim from the amount of business use: a car used 60% for the business gets 60% of the allowance, and it sits in its own pool so the sale can be settled later.
Under the main or special rate the car is written down year by year: a £20,000 car with emissions over 50g/km used wholly for the business gives £1,200 in the first year, 6% of £20,000, then 6% of the £18,800 left, and so on. The sale value comes off the pool when you sell. Capital allowances are not a ledger record: they are claimed once a year, after the year ends.
Finance, private use and selling
Hire purchase and loans
Hire purchase interest is allowable on the business share, and for capital allowances you claim on all the payments you will make under the contract from the day you start using the vehicle, interest aside. Interest on a cash loan is different under the cash basis: HMRC's manual caps interest and the costs of arranging finance at £500 a year in total.
Private use
Under either method you claim the business share only. For a van under the cash basis that means the business percentage of the price; for a car's capital allowances it means the same percentage of the allowance; under the flat rate it means business miles only. A mileage log is the evidence for all three.
Selling the van
If you claimed a van under the cash basis, what you get for it is a receipt of the trade when you sell it, reduced in proportion to any private share, and no capital gains tax arises. HMRC's manual adds that if your private use rises materially, the change itself counts as a receipt at a share of the van's market value.
Selling the car
When you sell a car you claimed capital allowances on, the sale value comes off the pool it is in. If it is more than the pool holds, the difference is added to your profits as a balancing charge; if a car in its own pool because of private use sells for less than its written-down value, what is left is a balancing allowance. You can never deduct more than the car cost you.
See what the claim saves you: the sole trader tax calculator.
Recording it in FileThat
Record a van you buy under the cash basis as Motor and fuel with its business-use percentage, which is where HMRC's helpsheet puts the cost of a vehicle other than a car, and the business share is filed in the car, van and travel box of your quarterly update. Its fuel and running costs go in the same category, or use mileage entries instead and record nothing for the van itself. A car is different: keep its running costs or its mileage entries in the ledger as usual, and enter the capital allowance at year end on the annual submission's allowances step, in the main pool, special rate pool or zero emissions car box. What you get when you sell the van is income, recorded as Other business income not included in turnover.
Straight answers
Can I claim the full cost of a van in the year I buy it?
Under the cash basis, yes. Gov.uk says that if you use cash basis and buy a vehicle other than a car, you claim the cost as an allowable expense, and it names vans among the things a cash basis business expenses. Only the business share if you also use it privately, and not if you use the flat mileage rate for that van, which already includes its cost.
Why is a car treated differently from a van?
Because the cash basis legislation lists cars among the capital items it will not expense, and gov.uk follows it: a car bought for the business is claimed as a capital allowance, unless you use simplified expenses for it. For capital allowances a car is a vehicle suitable for private use that most people use privately and that was not built to carry goods.
Can I claim 100% of an electric car?
A new and unused car with zero CO2 emissions bought before April 2027 qualifies for a 100% first-year allowance, so the whole business share of its cost comes off in the year you buy it. A second-hand electric car gets the main rate instead, 14% a year from 6 April 2026, and a hybrid does not qualify for the 100% allowance at all.
What are the capital allowance rates for a car in 2026-27?
For a car bought since April 2021: a new zero-emission car gets 100% in the first year if bought before April 2027; a car with emissions of 50g/km or less, or a second-hand electric car, gets the main rate of 14% a year, which was 18% before April 2026; a car over 50g/km gets the special rate of 6% a year. Cars never qualify for the annual investment allowance.
Is a double cab pick-up a van or a car?
For a pick-up bought under a contract made on or after 6 April 2025, HMRC treats most double cabs as cars, because they are as suited to carrying passengers as goods, so they go through capital allowances rather than being expensed. Before that date a double cab with a payload of a tonne or more was treated as a van. Pick-ups with a payload under a tonne were always cars.
What happens when I sell my van?
If you claimed it under the cash basis, what you get for it is a receipt of your trade in the year you are paid, reduced in proportion to any private share you never claimed, and HMRC's manual says no capital gains tax arises on it. If you claimed the van through capital allowances instead, the sale value comes off the pool and may produce a balancing charge.
Do I have to use Making Tax Digital for Income Tax?
If your qualifying income is over the threshold, yes. It has been £50,000 since 6 April 2026, and falls to £30,000 from April 2027 and £20,000 from April 2028. Qualifying income is your turnover before expenses, from self-employment and property together, as shown on your tax return.
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