Selling a company van: tax, VAT, and who actually owns it

Selling a company-owned van involves the business as a legal entity, which creates questions that don’t arise with a personal vehicle. Getting this right matters for your VAT return and your corporation tax position.

Who actually owns the van?

Before anything else, establish who holds the title.

Company-owned outright: The van is a business asset on the balance sheet. The company sells it, receives the proceeds, and accounts for any gain or loss.

Hire purchase in the company’s name: The finance company holds the title until the final payment. Identical to personal HP, you need a settlement figure before selling.

Lease in the company’s name: The van belongs to the leasing company. The business has the right to use it under contract. You cannot sell a leased van, only the lessor can. Contact the leasing company to discuss early termination or novation.

Director’s personal van used for business: If the van is in your personal name and you claim business use, the sale is a personal transaction. You may have capital gains implications if the proceeds exceed the original cost (rare on a depreciating asset, but check with your accountant).

VAT on the sale

If your business is VAT-registered and you claimed VAT back on the original purchase, you must charge VAT on the sale. This is the most commonly misunderstood point.

When we buy a van from a VAT-registered business, we expect a VAT invoice. The sale price we agree is ex-VAT; you invoice us at the agreed amount plus 20% VAT, which you then account for on your next VAT return.

If the business was not VAT-registered at purchase, or if the original purchase was a non-VAT-qualifying transaction (some second-hand van purchases use the margin scheme), the VAT treatment on the sale is different. If you’re unsure, speak to your accountant before selling.

One common mistake: A sole trader or small limited company agrees a sale price with us, receives the money, and doesn’t account for the VAT. This creates a liability on the next return that the seller wasn’t expecting. Agree the sale price inclusive or exclusive of VAT explicitly, and make sure your paperwork reflects whichever it is.

Capital allowances and the balance sheet

Vans bought by businesses typically go through the capital allowances system, either Annual Investment Allowance (AIA) or writing-down allowances, rather than depreciation as used in management accounts.

When you sell a van, the disposal needs to flow through your capital allowances pool:

• Proceeds exceed the pool value: a balancing charge arises, which is taxable as income
• Proceeds are below the pool value: a balancing allowance arises, which is deductible

In practice, most vans are sold for less than their written-down value after a few years of allowances, so a balancing allowance is more common than a balancing charge. Your accountant will handle this in your year-end accounts, but they need to know the sale proceeds and date.

Who can sign off the sale?

For a sole trader or partnership: the owner or a named partner can sign.

For a limited company: technically the sale of a business asset should be authorised by the directors. For a van sale, this is usually handled informally, but if your company has multiple shareholders or a board, and the van is a material asset, a board minute recording the decision is good practice.

Make sure whoever signs the sale documentation has authority to do so. We sometimes see vans being sold by employees who are not authorised signatories, which creates complications.

Fleet operators selling multiple vans

If you’re selling more than one van from a fleet, see our fleet sales page for a different process, we handle bulk fleet disposals with single-point pricing and coordinated collection across multiple sites.

Practical checklist for selling a company van

• Confirm who holds the title (company, finance house, or lessor)
• Get a settlement figure if on HP
• Confirm your VAT position with your accountant
• Agree the sale price clearly as ex-VAT or inclusive
• Issue a proper VAT invoice to the buyer
• Record the disposal in your capital allowances pool
• Notify DVLA of the keeper change (the business, not the director personally, is the registered keeper)
• Cancel the business insurance on the van from the sale date