HMRC planning ‘lifestyle vans’ tax

It is rumoured that the government is looking to squeeze more tax out of the high-end van market with the introduction of a new ‘benefit-in-kind’ type scheme. This would apply to vans and trucks with ‘extras’ such as leather seats, air conditioning, alloys and DAB radios.

So, more cash paid to HMRC for those businesses and owners who use their vehicles for personal, as well as business journeys.

As reported by HonestJohn.co.uk, HMRC neither confirm nor deny the plans but simply said, “We keep all taxes under review”. But there seems to be a lot of industry chatter around the possibility of this scheme coming to fruition.

The director of commercial vehicles at Manheim auction firm, James Davis, said:

“I’ve heard HMRC is looking at ‘lifestyle vans’. They are going to look at the benefit-in-kind payment for anything that has a spec similar to an executive car, which is currently different for a commercial vehicle than it is for a car.”

The consequences of this reach further than individual owners. As a whole, the residual value of the vans will probably decrease dramatically. Davis evidences this with a comparison to the previous changes to the road fund licence:

“It could have a massive negative impact on residual values, much like when HMRC played around with the road fund licence for emissions a few years ago. High emitting cars went into higher road fund licence groups and it killed the market for 4x4s and large, high emission cars.”

Given that people could just buy a lower-end vehicle, avoid the new tax and then get the extras added later – the revenue-raising potential of the scheme doesn’t seem to add up either.

As Davis explains:

“If the manufacturers down spec everything and aftermarket converters step in, then these vans will go off the radar. So either the HMRC gets revenue as it does now or it loses the opportunity, because it’s pushing the new value or the new vehicle price downwards and more people will buy lower spec vehicles.”

As with any new regulation, the question of enforcement does need to be considered. Davis asks the basic, “How on earth do you prove it when you’ve got people who are putting their commercial vehicle through the business and using it on the weekends?” And answers his own question with HMRC’s previous solution when they, “…upped the industry £500 you used to pay for running a commercial vehicle as benefit-in-kind – it’s now about £1500. It’s not that far away from the benefit-in-kind tax that you’d pay on running a premium car.”

Watch this space for any official HMRC announcements about this proposed new taxation scheme.

 

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