Q: I want to buy a motorhome or campervan; what are the tax implications?

Motor Homes

HMRC has always considered these vehicles to be cars for tax purposes because they are mechanically propelled road vehicles, and none of the exceptions in EIM23100 apply to prevent them from being cars. This means that, unless manufacturers start making low-emission motor homes, anyone provided with a motor home as a company car is likely to have a significant benefit in kind charge.

Tax on Company Cars

The starting point in calculating the cash equivalent is the list price of the car when it is first registered (i.e., when it is brand new). This is not necessarily the same as the price actually paid by the employer for the car. The cash equivalent also depends on the vehicle’s carbon dioxide (CO2) emissions. Essentially, the lower the emissions, the lower the benefit. This is an attempt by the government to be responsible with regard to the protection of the environment.

Common questions/misconceptions:

  • The test is for construction, not use. Therefore, if a vehicle is built to carry people but is used purely to carry goods or equipment for the business, then this does not make it a van. The rules state that if it is suitable to be used to carry people, then it is a car for tax purposes.
  • It does not matter if the vehicle is covered by company branding and advertisements; it will still be a benefit in kind unless it meets the pool car requirements explained above.
  • If a car is made available by an employer for the exclusive use of a particular employee, it doesn’t matter whether the car is owned by the employer or leased by the employer from a third party; the employee will have a taxable benefit in respect of the private use of the car.

Capital allowance position

If the motorhome is purchased outright or under a qualifying Hire Purchase agreement (not leased or rented), this means the owner is only entitled to claim writing down allowances (“WDA”).

As a motorhome is classed as a car for tax purposes, this means that a claim for annual investment allowance (AIA”) is prohibited and that access to First Year Allowances (“FYA”) is restricted.

The availability of WDAs will also depend on the level of CO2 emissions of the vehicle in question. The rates apply whether the vehicle is newly registered or second-hand.

  • If the CO2 emissions are lower than 50g/km, then WDA can be claimed at 18% per year.
  • If the emissions level exceeds 50g/km, then the claim can only be made at 6% per year.

If you need any assistance in this or any other matter, please feel free to get in touch.

Jack Hurren, 14 September 2023

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