Last updated: 16 October 2026
The question
A friend told me I could buy a van or motorcycle through my company and not pay any tax on it. Is that true?
The short answer
There is a grain of truth in it, but it is not tax-free. When your company buys a van or motorcycle for business use, it gets tax relief on the cost. But if you also use the vehicle for private journeys, you may have to pay tax on a benefit in kind, and the company pays Class 1A National Insurance.
Tax relief for the company
| Vehicle | Capital allowances | VAT |
| Van (new or used) | Annual Investment Allowance at 100%, up to £1 million a year | Usually reclaimable in full if used for business |
| New zero-emission van | 100% relief through AIA or first-year allowance | Reclaimable |
| Motorcycle | Annual Investment Allowance at 100% | Reclaimable if used for business |
| Car | No AIA; 100% FYA only for new zero-emission cars | Usually not reclaimable |
Van benefit in 2026/27
If you use a company van for private journeys beyond insignificant use, a flat benefit applies:
- Van benefit: £4,170 a year
- Van fuel benefit, if the company pays for private fuel: £798 a year
- Zero-emission vans: no van benefit
Ordinary commuting between home and work in the van is not counted as private use, and nor is insignificant private use, such as an occasional trip to the tip.
Motorcycle benefit
Motorcycles do not have a flat benefit. If a company motorcycle is available for private use, the benefit is usually 20% of its market value when first provided, each year, plus any private running costs the company pays.
Example
A plumber’s company buys a new diesel van for £30,000 plus VAT. It reclaims the £6,000 VAT and claims £30,000 AIA, saving up to £7,500 in corporation tax at 25%. The plumber also uses the van at weekends. He has a £4,170 benefit, costing him £834 at 20% tax, and the company pays Class 1A NIC of £625.50 at 15%. If the van were electric, there would be no van benefit.
Double-cab pick-ups
From April 2025, double-cab pick-ups with a payload of one tonne or more are treated as cars for benefit in kind and capital allowances, not vans. Transitional rules apply to vehicles bought before then.
When a vehicle is a car, not a van
HMRC looks at the vehicle’s construction and use. Vans converted to add rear seats, or vans whose primary purpose is carrying passengers, may be cars. Car benefit is usually much higher than van benefit, based on list price and CO2 emissions.
Selling the vehicle later
When the company sells a van it claimed AIA on, the sale price is a balancing charge added to profits. VAT is charged on the sale if VAT was reclaimed on the purchase.
Frequently asked questions
Can I avoid the van benefit by banning private use?
Yes, if you keep a written policy and genuinely do not use it privately.
Do I need a business mileage log?
It helps prove business and private use, especially for fuel.
Can I lease a van instead?
Yes. Lease payments are deductible and VAT is usually reclaimable.
What if I use my own van for the business?
The company can pay you 55p a mile for the first 10,000 business miles tax-free in 2026/27 (45p in earlier years).
Related: providing a van to a self-employed worker, buying a car through your company and motoring expense records.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with company vehicles and benefits in kind. See our limited company accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
