DBASS Manager, Eoghan Farrelly, provides an update on changes approaching for Vehicle Registration Tax via the 2017 Finance Bill.
If you or your company plan to purchase a commercial vehicle with 5 seats, with a large cargo area e.g. Toyota Landcruiser, Range Rover or Mitsubishi Pajero you may be best to buy before 31st July 2018.
This is because from this date the Vehicle Registration Tax (VRT) will jump massively from 13.3% to up to 36% of the open market price. This is due to a change in their classification for Vehicle Registration Tax purposes. This will mean that these vehicles could increase in price by tens of thousands of euro. Also bear in mind that if you are not VAT registered, then you are also caught for increased VAT as VAT is charged based on the price inclusive of VRT.
These new rules only effect commercial vehicles with four or more seats, and cargo area under one roof or in same section as the seating. Therefore, it does not affect jeeps or vans with 3 seats or less or crew-cab vehicles e.g. Toyota Hilux with cargo area external to the seats. Such vehicles must have a BE bodywork code at the type approval stage, with a gross weight less than 3.5 tons.
When purchasing any vehicle it is always best practice to consult your accountant about the taxation implications. As well as Value Added Tax and Vehicle Registration Tax, other taxation repercussions to consider are: Benefit In Kind (Taxable Benefit Received by the Driver/User of the vehicle) and Capital Allowances (the amount of the value of the vehicle that can be written off as a business expense and the timeframe to do so).
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