Commercial vehicle tax and insurance explained

Here’s what you need to know about tax and insurance on light commercial vehicles in Ireland.

There are effectively two scenarios to consider when taxing and insuring a light commercial vehicle in Ireland. The first is if you plan on using the vehicle for any private use at all, even just the occasional school run or trip to the shops. The second is a vehicle that us solely used for business purposes. It’s especially important not to declare that a vehicle is for business use only and then use it privately, as there are hefty fines for doing so.

Commercial vehicles for use privately

Before you commit to buying a commercial vehicle to use privately, it’s worth understanding the costs involved. For starters, the annual rate of tax, strangely, reverts back to the old by-engine-capacity system, not the newer post-2008 emissions-based system. That’s regardless of how new the vehicle is (excluding classics, which is a different thing altogether). So, for example, while the Ford Ranger powered by the 3.2-litre diesel engine would cost €333 per year to tax as a commercial vehicle, it’s in the biggest engine band (3,001cc or more), costing a whopping €1,809 per annum as a private vehicle.

This massive tax difference doesn’t apply across the board to quite the same extent, but any vehicle with an engine of over 1,201cc will be cheaper to tax as a commercial.

A few hundred Euros per year for the convenience of free use of the business van may sound like good value, but you also need to consider benefit-in-kind (BIK) taxation. If a van is needed for your job and private use is banned, then it’s likely that no BIK will be payable. Otherwise, it could be. That’s something to discuss in more depth with your accountant as BIK is usually calculated on the value of the vehicle.

Finally, if you’re still determined to use a commercial vehicle for private reasons, hold fire until you can sort out the insurance. It’s not as easy as it should be to arrange insurance on a commercial vehicle for private use. We suggest talking to a local broker to assist with that. And remember: you need to have details of your insurance before you can tax the vehicle.

Business-only commercial vehicles

If you’re taxing a light commercial vehicle (LCV – where the design gross vehicle weight of the vehicle does not exceed 3,500kg) for the first time, after a change of ownership or due to a change in taxation class to ‘goods,’ you’ll need to send off form RF111A, ‘Goods Only Declaration Form’ with your application. This must be completed at a Garda station. You’ll also need to include the Certificate of Roadworthiness if your vehicle is older than a year and the original motor insurance certificate confirming that you are insured for business use on the vehicle. The documentation must be sent to your local Motor Tax Office with payment etc.

In subsequent years, assuming no details have changed, you should receive a renewal letter in the post with instructions on how to renew the tax online. You’ll still need details of your insurance policy, but it’s a far quicker process.