What happens to tax when I sell my work van?

It depends how you claimed the van. If you deducted its price, the sale money is usually taxed in the year you sell, such as 2026-27. If you used the mileage rate, the sale usually adds nothing.

The logic is simple. If you had tax relief on the price of the van, selling it gives some of that value back, so HMRC takes it into account. The rules below follow GOV.UK and HMRC's manuals as checked on 19 October 2026.

The three ways you might have claimed

Cash basis

The cash basis is the default for sole traders. HMRC's Business Income Manual says that if any of the van's cost was deducted under the cash basis, money from selling it is brought in as a receipt of the trade. If you only claimed part of the cost because of private use, the receipt is cut in the same proportion. If you are VAT registered, selling the van is normally a sale you charge VAT on, whether or not you reclaimed VAT when you bought it, so check the VAT before you agree a price. If you keep your records without VAT, the receipt is the price without VAT.

The same page covers two other cases. If you stop using the van in the business but keep it, the same share of its market value counts as a receipt. If your private use rises a lot, a share of its market value counts too.

Traditional accounting and capital allowances

GOV.UK says that if you claimed 100% of the van's cost, for example through the annual investment allowance, and there is nothing left in the pool it belongs to, the full sale value is added to your profits. This is a balancing charge.

A sole trader's van that is also used privately sits in its own single asset pool. When you sell it, you compare the sale value with what is left in that pool:

• Sale value more than the balance: the difference is a balancing charge, added to profit.
• Sale value less than the balance: the difference is a balancing allowance, deducted from profit.

HMRC's Capital Allowances Manual says either figure is then reduced to reflect your private use over the time you owned the van.

Flat mileage rate

HMRC's manual says the mileage rate covers the cost of buying the vehicle and its depreciation, and that no capital allowances or actual costs can be claimed for a van on the mileage rate. The cash basis rule above only applies where the van's cost was deducted. So when a mileage-rate van is sold, there is usually nothing more to put through your figures. The same page says you can only change method when the vehicle is replaced, so you can choose afresh for the next van.

What counts as selling

GOV.UK says you dispose of an asset if you sell it, give it away, swap it, receive compensation for it (such as an insurance payout), start using it for something other than the business, or close the business. The value is usually the sale price. Use market value if you gave the van away or kept it for non-business use. In capital allowances figures you only deduct up to the original cost, even if you sell for more.

Part-exchange catches people out. HMRC's manual says disposal proceeds must go to the pool and cannot be netted off against the cost of a replacement. The trade-in value counts as the old van's sale price, and the new van is claimed separately.

Worked examples

All three tradespeople sell a van in the 2026-27 tax year.

The bricklayer and the plumber add those amounts to their profit. The joiner deducts theirs. If the business-use share changed while the van was owned, the reduction reflects use across the whole period. These are examples only. Your own figures will differ.

What this means for you

Before you sell or trade in a van, check how you claimed it. If you claimed its price, budget for the sale adding to your profit, especially if you also buy a new van in the same year. Claiming the new van can offset much of it, but the two are worked out separately. On the cash basis the new van is only claimed as you pay for it, with a trade-in counting as part of the payment, so a van on hire purchase, where the price itself is paid in instalments, spreads its claim over the years you pay. A van paid for in full with a bank loan is claimed when you pay the dealer. If you used the mileage rate, the sale normally has no tax effect.

Steps when you sell your van

1. Check your past tax returns or bookkeeping to see how you claimed the van: as an expense, through capital allowances or with the mileage rate.
2. Keep the sale or part-exchange paperwork showing the date and the price.
3. Work out your business-use share over the time you owned the van.
4. On the cash basis, record the business share of the sale price as income for that tax year.
5. On traditional accounting, take the sale value off the van's pool and work out any balancing charge or allowance, reduced for private use.
6. Decide how to claim the replacement van before you file, using our guide to claiming a van as a business expense.

Use the free MTD check to see when Making Tax Digital starts for you, and the trades section for more guides.