The Taxman and the Ineos Grenadier

[jeremy996]

I have seen a lot of very poor commentary about the UK tax situaton of the M1, (Belstaff Editions), and N1, 2 seat Utility and 5 seat commercial Station Wagon, with people expecting to be able to register and recover VAT and avoid the higher Benefit In Kind, (BIK), of cars compared to vans, like the old Disco commercials and Defender Double Cabs.

Vehicle taxation in the UK is split into two, and as we do not have joined-up government, what one department says has no relevance to what another believes. The DVLA will treat the M1 Grenadier as a car and will impose the higher VED on registration. The M1 will be subject to the usual speed limits on the various road types. The N1 vehicles will be subject to commercial VED, initially much less and the lower speed limits on the various road types.

HMRC considers all Grenadiers to be cars; as the Grenadier is more than 2 tonnes, it cannot be a "dual-purpose vehicle" and as it's payload is less than a tonne, it isn't a commercial vehicle. That means that you cannot recover the VAT on purchase and BIK cannot be on the basis of a van. Tax-wise, that will be a massive disappointment to anyone who wants to run one as their company vehicle.

HMRC does offer one lifeline; the Grenadier could be a "Pool Car", but that means it has to be kept overnight at the business premises and a log has to kept of all usage, with minimal personal mileage. (There are some technical adjustments that can be made to minimise the impact of these restrictions, but you will need a clued-up accountant to be HMRC proof!)

I reached out to Mark Tennant and Gary Pearson, (Head of Sales & Marketing, UK, INEOS Automotive) and got a response from Gary

"Hi Jeremy,

thanks for connecting; hopefully either Mark Tennant said I would be in touch or you made the link! Happy to answer this and we are actually prepping a FAQ document to offer to the online forums and Facebook groups that include this amongst other things. On the DVLA side we’re all fine and N1 approved for the lower road tax, road fund licence etc. on 2- and 5-seat non-Belstaff models. HMRC side is trickier (not least because their list of approved vehicles is in helpfully from 2014) so we haven’t made claims regarding VAT, BIK or NIC for that reason.

We have focussed on the core competency of the vehicle, not its UK tax status not least because it’s a global vehicle and tax policy can change at any time. HMRC want either a Tonne+ payload or a specification that meets their definition of a car-derived van. They set this out very clearly and Grenadier doesn’t meet either of these in its current form (not the 2-seat or the 5-seat).

We know that on the customer side of things, there are many customers with a tax situation where they have their own plans or options but that’s for individuals to investigate. For every 10 customers I speak to I’d say I get at least 6 different views as to what they will do/what their situation is.

Personally I would like to see the 2-seater approved as a commercial as I think it fits the bill, certainly far more than many other vehicles that have the status. Approaching HMRC is something we have as an option now we have all of the finalised homologation data but this is not a straightforward matter either.

I agree with you that it’s unlikely they would give us the status on the 5-seater. We are constantly updating our information that is held at customer services, in our Press Q&As and on our website and we’re making another change to the website text soon to make it clearer. I hope that helps? Do you think a FAQ for the online groups would be useful? We offered some of the groups this a while back but thought we’d revisit it. Grateful for feedback as we know it’s complex.

Best, Gary"

 

If I get any more information, I will post it up, but I guess the situation will not change in the short term. For my own situation, I will own my Grenadier as a personal vehicle and charge my business for all my business mileage. The business is not VAT registered, so recovering the VAT was never on the cards, so I am not mourning the loss of a massive tax saving.

Irritatingly, the situation in Europe is much simpler, as the vehicle classification is slightly broader, so no one can blame Brexit for this one! 

[elbekko]

9 hours ago, jeremy996 said:

We have focussed on the core competency of the vehicle, not its UK tax status not least because it’s a global vehicle and tax policy can change at any time.

Read: suck it peasants, we just needed your pre-orders for crowdfunding a pipe dream.

Same reason the new Defender is affordable/not-a-stupid-financial-decision only for a very select few here in Belgium. Too expensive as a personal car, not fiscally interesting enough as a company car.

[Retroanaconda]

There has been a lot of chat on the Facebook groups about it, a few folks are facing a big BIK bill as they had assumed it would be classed as a commercial. While it would appear to be a bit of an own goal for Ineos, it’s only really relevant for the UK market though, and I doubt that will make up a significant proportion of sales.

It’s no bad thing in my view, almost every second vehicle round here is a double cab pickup - lots of which are supplied as company cars and are technically ‘commercials’ so attract minimal tax burden yet get used as family cars with occasionally a few bits chucked in the back. A clampdown on this is probably overdue.

The speed limits thing will be interesting though. In practice it’s pretty rare to find a van doing 50mph on a national speed limit road and the police don’t care, but as speed cameras get more advanced and can check against databases I am sure there will be fines through the post one day. 

[Northwards]

Not directly relevant to the car, but I saw that a committee of MPs had referred to the HMRC as something like a ‘diabolically poor’ organisation. I can’t see that upgrading their list of vehicles would be a big priority. 

[Bowie69]

Anyone who has had the joy of dealing with the HMRC in any capacity will completely agree with that assessment.

I assume the prototypes pickup would meet the requirements, at least at the moment, but as the Ineos statement says, it is worthless trying to target certain tax laws as we all know they can change in a heartbeat, especially during this period of governmental self-flagellation over climate change.

[Chicken Drumstick]

37 minutes ago, Retroanaconda said:

There has been a lot of chat on the Facebook groups about it, a few folks are facing a big BIK bill as they had assumed it would be classed as a commercial. 

I wonder why that is though. The 1 tonne payload is quite clear and there are not very many enclosed non van vehicles that have this. I'd assume the commercial hard top Defender, commercial Land Cruiser and commercial Jimny must all be in the same camp as the Grenadier?

[jeremy996]

What looks like it should be set in stone is not always - HMRC have some wiggle room if they want to use it. The Grenadier N1 2 seater Utility is likely to be accepted as a commercial vehicle, but at present it is at the discretion of the local Tax inspector. If it is on the list, (circa 2014!), it is an accepted norm. Ineos have to push for it to be on the list and have not done so, yet.

[Happyoldgit]

4 hours ago, Retroanaconda said:

There has been a lot of chat on the Facebook groups about it, a few folks are facing a big BIK bill as they had assumed it would be classed as a commercial. While it would appear to be a bit of an own goal for Ineos, it’s only really relevant for the UK market though, and I doubt that will make up a significant proportion of sales.

It’s no bad thing in my view, almost every second vehicle round here is a double cab pickup - lots of which are supplied as company cars and are technically ‘commercials’ so attract minimal tax burden yet get used as family cars with occasionally a few bits chucked in the back. A clampdown on this is probably overdue.

The speed limits thing will be interesting though. In practice it’s pretty rare to find a van doing 50mph on a national speed limit road and the police don’t care, but as speed cameras get more advanced and can check against databases I am sure there will be fines through the post one day. 

What's wrong with comfortable pickups being used in such a manner? I can't see a problem myself unless you are really concerned about loss of income to the Exchequer?

[Retroanaconda]

Nothing at all, but it’s a tax loophole that needs to be closed and made fairer. 

[Bowie69]

It's already been partly closed, company commercial vehicles used for personal mileage (i.e. stored at employee's home and used for going ot the shops etc.) attracts a £700-odd charge to the employee as a BIK.

 

 

[Retroanaconda]

£700 a year for a personal car with all your mileage paid is not really a fair consideration in my opinion. Double cab pickups in this situation should be the same taxable benefit as a car given they are used as such.

 

[Bowie69]

Well it was a first step brought in by Sunak, if he had gone full bananas on it can you imagine the outcry?

Next time, he probably will.

[Escape]

5 hours ago, Retroanaconda said:

£700 a year for a personal car with all your mileage paid is not really a fair consideration in my opinion. Double cab pickups in this situation should be the same taxable benefit as a car given they are used as such.

 

That's what's happening in Belgium now. After the rules for a closed van were made a bit stricter (and most importantly better enforced), many bought a double cab pick up as they were still classed as a commercial. From this year on, new pick ups will be taxed as a car unless registered to a business. But fair game, existing pick ups will remain commercial so it will not affect their resale value. Me and @elbekko have removed the rear seats from our Range Rovers, as is often done, to qualify for commercial tax. So we do pay a price in practicality. I had to borrow a frekkin Picasso last year to be able to drive my in-laws to a funeral...

The 2-seat Grenadier will certainly be a commercial in Belgium, as was the Defender 110 hardtop (or station wagon if the rear seats were removed). The 5-seater, not a chance! And tax will be considerably higher than in UK, so we're unlikely to see many of those.

[Anderzander]

13 hours ago, Northwards said:

Not directly relevant to the car, but I saw that a committee of MPs had referred to the HMRC as something like a ‘diabolically poor’ organisation. I can’t see that upgrading their list of vehicles would be a big priority. 

I think it’s the only Government Department that doesn’t have a Minister. They have more autonomy and freedom than any of the other Departments I think.

[elbekko]

16 hours ago, Retroanaconda said:

£700 a year for a personal car with all your mileage paid is not really a fair consideration in my opinion. Double cab pickups in this situation should be the same taxable benefit as a car given they are used as such.

 

Just to give a bit of perspective, to have a "car" Grenadier as a company car here in Belgium, I ran the BIK calculation tool real quick:

A Fieldmaster with the petrol engine, £69000 (€78000 EUR) and 326g CO2 (!), would result in a BIK of €12000 per year! Registering it as commercial in your business the rules are a bit more vague, but generally they say you should calculate BIK as a percentage based on actual private/professional use, calculated from the actual cost of the vehicle (or, more accurately, actual benefit incurred from using the vehicle...). Not quite as easy to throw a number at, but unless you actually use it 100% for a business you're probably still looking at around half of those car numbers.

Oh, and all that on top of a yearly tax of €1200, and a one-time registration tax of €12000.

They should probably sell it with a bottle of lube here.

[rusty_wingnut]

It's a difficult situation, and one where companies should not be punished as suggested. It is only the same as sole traders using their vans for running about at the weekend. I see a number of transits with kids seats in the front at ym sons football training! Secondly some business rely on towing capacity as opposed to load carrying, and hence a transit van may not fill the need that a pickup can.

 

You can't help but feel INEOs have missed a trick with not pushing HMRC on this matter, it would be an excellent selling point 

Edited February 15, 2023 by rusty_wingnut

[Bowie69]

4 minutes ago, rusty_wingnut said:

It is only the same as sole traders using their vans for running about at the weekend.

This is also targeted by the £700 charge.

 

How it gets enforced I will never know.

[rusty_wingnut]

Exactly my point, you are punished as a ltd company, whereas average van man gets away with it.

[Retroanaconda]

Just to be clear I’ve no issue with anyone receiving a vehicle as a benefit from work, be it a van or a pickup. The point I’m making is that if it is to be used as a car - as many double cabs are - then it should be taxed as a car, as the benefit is the same as having a car.

If your company vehicle is a two-seater transit van then this is much less flexible for private use and so the taxable benefit is lower - that makes sense. 

[steve b]

Fair taxation.............now there's a subject with more legs than a giant Centipede and a worse bite.....

Steve

[Happyoldgit]

1 hour ago, steve b said:

Fair taxation.............now there's a subject with more legs than a giant Centipede and a worse bite.....

Steve

Beware the green eyed monster.... 🤣

[Huw Williams]

Massive issue for me. Ineos continue to disingenuously claim on their web site that the five seat [with panel side] and the van are ‘certified as commercial vehicles’.  I have a five seater on order ‘built on purpose’ to do the same sort of work as my existing Ford Ranger which carries mainly tools in the back seat area with the capability of very occasionally carrying an extra passenger or two [after making room for them]. Unfortunately it seems that I will need to cancel my Grenadier order and get another Ford Ranger. I am not particularly upset by this because it always troubled me as to how they got certified with less than 1000kgs payload.

It spells far more trouble to Ineos though, even with their double cab pickup [because it too will need to have a limited load capacity to keep below 3.5 tons gross.  The big issue here is that UK sales are limited to 6000 with only about 1700 of those being passenger class vehicles. 4300 annual sales must be commercial vehicles if they are to hit their sales limit. If 90% of sales are fully glazed cars then only less than 1900 total annual sales will be allowed in the UK.

This really does put the kibosh on Grenadier UK until they offer zero emission vehicles. If they survive that long as a company. I have plenty of time before mine is due to be built but it does look like it will be a cancellation of my anticipated five seat commercial. Ineos dealers must be apoplectic about this situation as must those that have signed a contract and taken delivery of a vehicle which they believed was ‘certified as a commercial vehicle’ at face value. It increasingly looks like my eventual vehicle will be another Ford Ranger, not a Grenadier. In truth it probably suits me better anyway.

Edited May 20, 2023 by Huw Williams

[jeremy996]

As my first entry states, the vehicle is a commercial so far as DVLA are concerned; HMRC march to a different drum and Ineos have not done a JLR and lobbied to get the "commercials" as acceptable, yet.

You are far from the only one, but lobbying HMRC is not a priority with Ineos; when selling them becomes harder, I'm sure they will step up.

Ultimately, until HMRC update their list of acceptable commercial vehicles, if you buy, apply the van benefit in kind and recover the VAT, your local tax inspector may accept the use as commercial, it depends on the actual useage and is far from transparent, ("tax inspector's discretion"), so I can understand why people stick with what they know. Even Ineos conceed that the 5 seat Utility Station Wagon will not likely quailfy with HMRC as a commercial, even after lobbying.

Ineos do not see the UK as a "make or break" market, expecting to sell more units in Australia, South Africa and North America. They expect to have a BEV launched fairly shortly, (the smaller Grenadier), and the double-cab could be sold as a car or a commercial vehicle. The capacity of the vehicle is not in doubt; it's how they fit it into the local regulations that is the problem.

Edited May 21, 2023 by jeremy996
More ideas, sorting out the countries

[Arjan]

"Irritatingly, the situation in Europe is much simpler, as the vehicle classification is slightly broader"

Not sure what you mean as each country on the Continent has it's own idea about what is commercial and what's not.

In both Holland and France, it is not likely the Grenadier will be classed as a "van" and this makes it a play thing for the real seriously rich...

Commercial users will be few and very far apart.

Just like the "new Defender"

 

[smallfry]

I don't see the problem. This is not directed at anyone at all, just how I see it.

The Grenadier is a car, just like the new Defender is a car. If you choose to dump tools and some bricks in the back and use it as a commercial, or as a company car, that is your choice. Unfortunately you have to pay the outrageous tax, again your choice.

For a commercial, it should have two (or three) seats in the front, with a full length rear load floor, no windows in the sides, and no facility for fitting any seats in the rear, a bulkhead and negligible trim in the back, with an option of rear door, or tailgate and "catflap". Either that or be a pickup. Then pay a bit less outrageous tax, and the appropriate BIK for either. You could then pimp it up as you wish.

Ineos probably do not want to sell a full commercial, because there would be less money in it, as most sales would be commercial, and there must be a price differential.

It grates on me that I have to pay commercial RFL for my three vans. I do not run any sort of business, or use them for work purposes. But its my choice, as the vans are more use to me than a car.