Taxation on five-seater commercials is still a grey area

SCARCELY a week goes by without someone asking us about the road tax on ‘FiveSeater Commercials’.

It remains one of the most contentious areas and different interpretations of the regulations are still creating confusion.

As you know these ‘commercials’ are really five-seat passenger vehicles in the strict sense of the word.

They became popular because you can get a large 4x4 for thousands less than before due to a change in taxation regulations.

The only drawback is that you get five instead of the seven seats that would normally come with a large passenger 4x4.

But you do get a mix of the traditional commercial workhorse as well as a luxurious five-seat family-car at the much lower 13.3pc VRT level.

However, there remains a major grey area over how much road tax some owners should pay.

The tax can range from the €333 levied by some local authorities to as much as €1,809 with others.

Some local councils are charging more than €333 because they believe vehicles will be used to carry family/private passengers as well as being used as part of the owner’s business.

It does not follow that because you pay a lower VRT (commercial rate) that your road tax will be €333.

That is because motor tax is based on both the construction and use of a vehicle.

To be absolutely clear: for a vehicle to be taxed as a commercial it has to be used “solely in the course of trade or business”.

The Department of the Environment says: “Passengers can be carried in a goods vehicle if they are employees of the trader and are being carried in the course of their employment”.

But if the vehicle is used for ferrying non-work/business related passengers then they should pay higher road tax. The department says that would “generally be the case with a fiveseater being used privately”.

This means a vehicle cannot, by law at least, ‘under any circumstances’ be used for social, domestic or pleasure purposes on €333 road tax.

And it is down to the motor tax office to “seek documentation supporting a claim for the goods rate of motor tax”.

If the rule is found to be breached you face an excise penalty of €1,270 if not paying the higher road tax.

The advice is to check in advance and be certain on your road-tax liability with your local council.