If you use a van for your property business, you might be wondering whether you can claim capital allowances on a second hand van. The answer is not always straightforward. It depends on how you bought the van, whether you are a sole trader or a limited company, and whether the van was previously used for another business.

This guide explains the rules for claiming capital allowances on second hand vans as a UK landlord. We cover the difference between cars and vans, the impact of the Section 24 restriction, and how to structure your claim correctly.

What Are Capital Allowances?

Capital allowances let you deduct the cost of certain business assets from your taxable profits. For landlords, this typically applies to plant and machinery used in the rental business. A van used for property management tasks, such as carrying tools, materials, or visiting properties, can qualify as plant and machinery.

However, the rules differ depending on whether you are a sole trader or a limited company. Sole traders face restrictions under Section 24, which limits mortgage interest relief but does not directly affect capital allowances. Limited companies can claim capital allowances more freely, but there are still conditions to meet.

Can You Claim Capital Allowances on a Second Hand Van?

Yes, you can claim capital allowances on a second hand van, provided the van is used wholly and exclusively for your property business. If you use the van for both business and personal journeys, you can only claim the business proportion.

The key condition is that the van must be used for the purposes of your rental business. This means you need to demonstrate that the van is necessary for tasks such as visiting properties, carrying equipment, or transporting materials. A van used mainly for personal travel would not qualify.

For second hand vans, the claim is based on the purchase price you paid, not the original market value. You should keep a receipt or invoice showing the date and amount of purchase.

Annual Investment Allowance (AIA) and Second Hand Vans

The Annual Investment Allowance (AIA) allows you to claim 100% of the cost of qualifying plant and machinery in the year of purchase, up to a limit. For the 2025/26 tax year, the AIA limit is £1 million for most businesses. This applies to both new and second hand assets, including vans.

If you are a sole trader landlord, you can claim AIA on a second hand van as long as the van is used for your property business. The full cost can be deducted in the year you buy it, subject to the AIA limit. This is a significant tax saving, as it reduces your taxable rental income immediately.

For limited companies, the same AIA rules apply. However, companies must also consider the writing-down allowance (WDA) if the AIA limit is exceeded. The WDA for vans is typically 18% per year on a reducing balance basis.

What About Cars? The Difference Matters

Vans are treated more favourably than cars for capital allowances. Cars are subject to stricter rules, including CO2-based restrictions on the writing-down allowance. Vans, by contrast, are generally treated as plant and machinery without these restrictions, provided they are used for business purposes.

If you buy a second hand van that is classified as a commercial vehicle (e.g. a Ford Transit or Mercedes Sprinter), it qualifies for capital allowances. If you buy a dual-purpose vehicle (e.g. an SUV used as a van), HMRC may classify it as a car, which would limit your claim. Always check the vehicle's classification with HMRC or your accountant.

How to Claim Capital Allowances on a Second Hand Van

To claim capital allowances on a second hand van, follow these steps:

  • Keep records: Retain the purchase invoice, proof of payment, and any documents showing the van's classification.
  • Calculate business use: If you use the van for both business and personal journeys, calculate the business proportion. For example, if you drive 10,000 miles per year and 8,000 are for business, you can claim 80% of the cost.
  • Include in your tax return: Sole traders claim capital allowances on the property pages of their self-assessment return. Limited companies include them in the company tax return.
  • Consider the AIA: If you have not used your AIA limit elsewhere, you can claim the full cost in the year of purchase.

If you are unsure about the calculation, speak to a property accountant who can review your circumstances.

Restrictions for Sole Traders Under Section 24

Section 24 restricts mortgage interest relief for individual landlords to a basic rate tax credit. This does not directly affect capital allowances. However, it does mean that sole traders cannot claim capital allowances on assets used for a property business if the asset is also used for residential purposes. This is a common area of confusion.

For a van used solely for the property business, there is no restriction. But if the van is also used personally, the claim must be apportioned. HMRC expects you to keep a mileage log to support the business use percentage.

For a full breakdown of what you can and cannot claim, see our complete list of landlord tax deductions.

Second Hand Vans and the Writing-Down Allowance

If you do not claim AIA, or if the cost exceeds the AIA limit, you can claim the writing-down allowance (WDA). For vans, the WDA is 18% per year on the reducing balance. This means you claim 18% of the remaining value each year until the asset is fully written down.

For example, if you buy a second hand van for £15,000 and do not use AIA, you claim £2,700 in year one (18% of £15,000). In year two, you claim 18% of the remaining £12,300, which is £2,214, and so on.

This is less generous than AIA, so most landlords prefer to use AIA if they have sufficient profits to offset.

What If the Van Was Previously Used for Another Business?

If you buy a second hand van that was previously used for another business, you can still claim capital allowances. The key is that you are the first user of the van in your property business. The previous owner's use does not affect your claim.

However, you must ensure the van is not a "connected party" purchase. If you buy the van from a relative or a company you control, HMRC may treat the transaction as a disposal at market value. This could affect the amount you can claim. Always get a professional valuation in such cases.

Vans vs. Cars: Which Is Better for Landlords?

For most landlords, a van is a better choice than a car for claiming capital allowances. Vans qualify for the full AIA and WDA without CO2 restrictions. Cars are subject to a lower WDA (6% or 18% depending on CO2 emissions) and cannot use AIA if the car is used for business purposes.

If you need a vehicle for your property business, a van is often the most tax-efficient option. However, consider your actual needs. A van is not suitable for all landlords, especially if you do not carry tools or materials regularly.

How to Structure Your Claim for Maximum Benefit

To maximise your capital allowances claim on a second hand van, consider the following:

  • Use AIA if possible: Claim the full cost in the year of purchase to reduce your taxable profits immediately.
  • Keep a mileage log: This supports your business use percentage and protects you in an HMRC enquiry.
  • Consider incorporation: Limited companies have more flexibility with capital allowances and are not affected by Section 24. Read our guide to buy-to-let limited companies for more details.
  • Review your overall tax position: If you have other capital allowances claims, ensure you do not exceed the AIA limit.

If you are considering incorporating your property business, our incorporation services can help you assess the tax implications.

Common Mistakes Landlords Make

Here are some common errors to avoid when claiming capital allowances on second hand vans:

  • Claiming for personal use: You can only claim the business proportion. HMRC may ask for evidence.
  • Ignoring the AIA limit: If you have other capital allowances claims, you may exceed the £1 million limit. Plan your claims carefully.
  • Misclassifying a car as a van: HMRC has strict definitions. A dual-purpose vehicle may not qualify as a van.
  • Not keeping records: Without a purchase invoice and mileage log, your claim may be rejected.

If you are unsure about any aspect of your claim, contact us for advice.

Final Thoughts

Claiming capital allowances on second hand vans is a legitimate way to reduce your tax bill as a landlord. The key is to ensure the van is used for your property business, keep accurate records, and choose the right allowance (AIA or WDA) for your situation.

For sole traders, the Section 24 restriction does not affect capital allowances on vans, but you must apportion any personal use. Limited companies have more flexibility but must still follow HMRC rules.

If you need help with your tax return or want to review your capital allowances claims, our team at Property Tax Partners can assist. We specialise in property tax and can help you maximise your deductions while staying compliant.