Accounting & Tax for Transport & Logistics Businesses

Heavy goods vehicles (HGVs) go into the main rate pool at 18% WDA per year. Cars with CO2 ≤ 50g/km (electric and low-emission) go into the main rate pool at 18%. Cars with CO2 > 50g/km go into the special rate pool at 6% WDA. Vans qualify as plant and machinery — 18% WDA or AIA (up to £1m) for immediate deduction in the year of purchase. The acquisition method matters: hire purchase and outright purchase create capital allowances; operating leases do not (lease payments are expensed monthly instead).

The Van Benefit Charge (VBC) is a taxable benefit that arises when a company van is made available to an employee for private use. For 2026/27, the VBC is £3,960 per van per year. Employees pay income tax on this figure (40% = £1,584/year), and the employer pays Class 1A NIC (15% = £594/year). If fuel is also provided for private use, an additional £757 fuel benefit applies. The VBC is eliminated if: the van is subject to a genuine private-use restriction, not merely a written policy — HMRC requires evidence of enforcement.

VAT on transport services depends on the nature of the service. Passenger transport in vehicles with 10+ seats is generally zero-rated. Freight transport within the UK is standard-rated. International freight transport (goods moved from UK to overseas or vice versa) is zero-rated for the international leg. Transport services between points in the same country (domestic UK legs of international journeys) are standard-rated. The place of supply rules for freight transport services are complex — we confirm the VAT treatment for each service type.

HMRC approves benchmark subsistence rates for employees who are away from their usual place of work for a specified period. Drivers can claim: £5 for 5–10 hours away, £10 for 10+ hours, £25 for overnight (with overnight stay evidence). These can be paid without income tax or NIC if the employee has not already received a free meal or accommodation. For HGV drivers with sleeper cabs, the overnight subsistence rate applies when the driver sleeps in the cab. Rates are per absence from base — not per 24-hour period.

Self-employed couriers are responsible for their own income tax and National Insurance (Class 2 and Class 4). The engager (courier company) has no PAYE obligations — but must assess whether the IR35 off-payroll rules or worker status rules apply. Where drivers are in practice controlled by the courier company (fixed routes, company-branded vehicles, exclusive engagement), HMRC will challenge the self-employed classification. We assess employment status before each engagement.

Without a written and enforced private-use restriction, the VBC applies by default. A HMRC fleet review finding 10 unregistered private-use vans results in back-years assessment at £3,960 + NIC per van per year. Implementation cost: a morning. Potential saving per van: £2,000+/year.

Cars with CO2 above 50g/km go in the special rate pool (6% WDA) — not the main rate pool (18% WDA). Placing them in the main rate pool overstates annual capital allowances and understates CT. HMRC can assess a correcting CT amendment going back 4 years.

Where a transport business engages labour-only subcontractors for work that falls within CIS (e.g., waste transport, materials delivery on construction sites), CIS deduction obligations may apply. Failing to deduct CIS where required creates contractor liability.

HMRC requires contemporaneous mileage logs to support fuel card costs claimed as business expenses. Without logs, HMRC can challenge the private-use proportion of fuel costs — potentially disallowing all fuel costs not supported by logs. We implement mileage log procedures for all fleet clients.