Van purchase

Partial

You cannot deduct the full purchase price of a van as a normal expense. Instead, you claim capital allowances (the way HMRC lets you claim the cost of bigger purchases like vans and equipment, either upfront or spread over time). Under the Annual Investment Allowance (AIA), you can deduct the full cost of a van (up to £1 million per year) in the tax year you buy it. This is the simplest option for most trades. If you use cash basis accounting (where you record income and spending when money changes hands), you can claim the van as a direct expense without going through capital allowances. If you prefer to spread the cost, use writing-down allowances, but the AIA is almost always the better choice for a single van.

Key thresholds

AIA limit: £1,000,000 per year. Writing-down allowance (main pool): 14% per year from 6 April 2026 (was 18% in prior years).

Common questions

Can I deduct the cost of buying a new van in the year I buy it?

Yes, via the Annual Investment Allowance. Claim the full purchase price (excluding VAT if VAT-registered) in your tax return for the year you bought it.

I bought a second-hand van. Can I still claim?

Yes. Capital allowances apply to new and second-hand vans alike. The purchase price is the deductible amount.

Watch out for

If the van is used partly for personal use, you must reduce the allowance to reflect the business-use proportion.
Hire purchase counts as a purchase for capital allowances purposes. Claim when the agreement starts, not when it ends.

Common mistakes

Claiming the full van cost as a straightforward expense without going through capital allowances (only valid on cash basis; traditional accounting requires AIA or writing-down allowances).
Forgetting to reduce the AIA claim when the van has any personal use.
Treating hire purchase as an operating expense. It counts as a purchase for capital allowances purposes and must be claimed as such.

Cash basis vs traditional accounting

On cash basis accounting, you can claim a van as a direct business expense in the year you pay for it. No capital allowances needed. The main exception is cars: cars must go through capital allowances even on cash basis. If you use traditional accounting, the AIA or writing-down allowances apply.

AIA limits can change at Budget. Verify the current limit before filing.

HMRC sources

https://www.gov.uk/capital-allowances/annual-investment-allowance https://www.gov.uk/work-out-capital-allowances/rates-and-pools

Last verified: July 2026 · Tax year 2026/27

Related expenses

Van insurance Fuel costs Vehicle repairs and servicing

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This guidance is for general information only. Tax rules change. Verify with HMRC or a qualified accountant before filing.

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