Is buying a van
tax deductible?

Yes. A van used in the business is an allowable expense in full on the cash basis, and on traditional accounting it qualifies for capital allowances, including the Annual Investment Allowance, so the whole cost can usually be deducted in the year you buy it (GOV.UK; capital allowances). If you use the mileage rate for the van, you claim neither.

Vans are treated far more generously than cars. On the cash basis, now the default for sole traders, the cost of a van is simply an expense. On traditional accounting, the Annual Investment Allowance usually gives the same result. The main decision is whether to claim the van's cost and running costs, or the mileage rate, which covers both.

Is buying a van tax deductible?

The HMRC rule

On the cash basis a vehicle other than a car is an allowable expense; on traditional accounting it is claimed through capital allowances. The rule comes from Car, van and travel expenses, Claim capital allowances, Simplified expenses if you’re self-employed.

GOV.UK says that on the cash basis only cars are claimed as capital allowances; other vehicles are claimed as allowable expenses, and on traditional accounting you claim capital allowances (travel expenses). Vans are plant and machinery, so they qualify for the Annual Investment Allowance of up to £1 million a year (capital allowances). You cannot use simplified expenses for a vehicle you have already deducted as an expense on the cash basis, or claimed capital allowances on (simplified expenses).

When you can claim it

• The full cost of a van as an expense on the cash basis, for the business share.
• The Annual Investment Allowance on a van on traditional accounting.
• Van equipment such as racking, a tail lift or refrigeration, the same way.
• Interest on a loan or hire purchase for the van, as a finance cost.

When you cannot

• The cost of a van whose business use you claim at the mileage rate.
• The private share of a van also used personally.
• The Annual Investment Allowance on a double cab pick-up treated as a car.
• Both an expense and capital allowances for the same van.

What to claim instead

The alternative to claiming the cost of a vehicle is the simplified mileage rate: 55p a mile for the first 10,000 business miles in 2026/27 (45p before 6 April 2026), then 25p (GOV.UK). It covers the vehicle's purchase, finance and running costs in one figure, so if you use it for a vehicle you do not also claim capital allowances, fuel, insurance or repairs for that vehicle.

How to decide if you can claim it

1. Was it for the business? A cost is only allowable if you incur it wholly and exclusively for the business. If it also serves a personal purpose that cannot be separated, such as clothing that keeps you warm or a meal that keeps you going, HMRC disallows it.
2. Is part of it personal? Where a cost has a business part you can identify, such as the business calls on a phone bill or the business miles in a car, you claim that part and leave the rest out, on a reasonable basis you can explain.
3. Is it a running cost or something you keep? Whether it is a running cost or something you keep depends on what you buy. Items used up within two years, and regular renewals, are running costs; things you keep are relieved through capital allowances on traditional accounting and as expenses on the cash basis.
4. Is there a specific rule? For buying a van, the deciding rule is buying a van, motorcycle or other vehicle: on the cash basis a vehicle other than a car is an allowable expense; on traditional accounting it is claimed through capital allowances.

Worked example: a new van for a plumber

A plumber on the cash basis buys a £28,000 van used only for work. He deducts the full £28,000 as an expense in the tax year he pays for it, saving £7,280 at the basic rate (26%) and £11,760 at the higher rate. On traditional accounting, the Annual Investment Allowance gives the same deduction in the year of purchase.

Selling the van later

Relief for the van's cost is not the end of the story. On the cash basis, the money you receive when you sell the van is business income in that year. On traditional accounting, the sale proceeds create a balancing charge in the pool, which adds back some of the allowances you had. Either way, only the van's true net cost to you ends up relieved.

Vans with private use

A van used partly privately, such as for weekend trips, can still be claimed, but only for the business share. On the cash basis you deduct the business percentage of the cost; on traditional accounting the allowances are restricted by the private-use percentage. A sign-written van kept at home and used only for work usually has no private use to adjust for.

Vans or pick-ups

A single cab pick-up with two seats is normally a van. Most double cab pick-ups bought from 6 April 2025 are treated as cars for capital allowances, so they cannot use the Annual Investment Allowance and, on the cash basis, are not an ordinary expense (CA23511). Check the vehicle's classification before you buy if the tax treatment matters to the decision.

Leasing instead of buying

If you lease a van rather than buy it, the lease payments are an allowable running cost for the business share, and the 15% lease restriction that applies to some cars does not apply to vans. Hire purchase is different: you are treated as buying the van, so the treatment on this page applies, with the interest as a finance cost.

Where it goes on your return and in MTD

For a sole trader, the allowable part goes under car, van and travel expenses (SA103F box 20 on the full self-employment pages). Under Making Tax Digital for Income Tax, it goes in the same category of your quarterly update, which is the category TapTax files it under when you record the cost.

If your turnover was under £90,000, you can use the short self-employment pages (SA103S), which ask for a single figure for total allowable expenses rather than a box-by-box breakdown, and the full pages let you give just a total in box 31 too. The category still matters for your own records and for Making Tax Digital, where each quarterly update uses the same categories unless you choose to send one consolidated figure.

Most sole traders now use the cash basis, the default from the 2024/25 tax year, which counts a cost when you pay it. On traditional accounting you count it when you incur it, and equipment you keep goes through capital allowances rather than expenses.

How much an allowable cost saves

The value of a deduction is the tax it removes from your profit, not the cost itself. At the basic rate a sole trader saves 26p for every pound of allowable expense, at the higher rate 42p, and in the personal allowance taper between £100,000 and £125,140 as much as 62p. Landlords pay no Class 4 on rental profit, so they save 20p or 40p.

What £1,000 of allowable expense saves a sole trader in 2026/27

• Basic rate (20% + 6%)£260
• Higher rate (40% + 2%)£420
• Additional rate (45% + 2%)£470
• Allowance taper band (60% + 2%)£620

Records to keep

Keep the purchase or finance agreement, every invoice for running costs, and a mileage log that shows business and total miles, so you can support the business percentage. For capital allowances, keep the date the vehicle was bought, its cost and, for a car, its CO2 emissions.

From 6 April 2026, sole traders and landlords with qualifying income over £50,000 keep these records digitally and send quarterly updates under Making Tax Digital, falling to £30,000 from April 2027 and £20,000 from April 2028. The MTD requirement checker shows when it applies to you.

Common mistakes

• Claiming the van’s cost and then switching to the mileage rate for it.
• Claiming the full cost of a van that is also used privately.
• Treating a double cab pick-up bought after April 2025 as a van.

Related expenses

This item sits in the car, van and travel expenses category, alongside buying a car, car insurance, car leasing and PCP, car repairs and servicing, electric and hybrid cars, food and meals, fuel and hotels. The A to Z of expenses answers the same question for every other cost.

TapTax sorts each cost into the right category as you record it, applies the business share where you set one, and keeps the receipts with the figures, ready for your quarterly updates and final return.