Your understanding is right — and crucially, you're not confusing it with the car rules. Vans get much better treatment than cars.
**The headline: yes, you can deduct the full cost in year one**
A van counts as plant and machinery (a commercial vehicle, not a car), so it qualifies for the Annual Investment Allowance. That means you can deduct the full cost of the van — up to £1 million of qualifying spend a year — against your taxable profits in the year you buy it. There's also full expensing (a 100% first-year allowance) for new, unused main-rate assets, which vans are. Either way, the whole cost comes off in year one.
**No emissions-based sliding scale like cars**
Cars have fiddly CO2 thresholds deciding whether you get 100%, 18% or 6% allowances. Vans don't work like that — the CO2 figure doesn't restrict your claim. One caution: be careful with double-cab pickups, as HMRC treats some of them as cars rather than vans for tax purposes, which would land you with the much stingier car rules. A straightforward panel van is fine.
**Outright purchase vs finance**
- Hire purchase: treated as a purchase for tax purposes, so you can claim AIA on the full cost (excluding interest) when you take delivery.
- - Operating lease/contract hire: you don't own the van, so no capital allowances — but the lease payments are deductible as a business expense instead.
**Gotchas**
- Private use: if you're a sole trader and use the van privately too, you must reduce the allowances by the private-use proportion. (If the van belongs to a limited company and you use it privately, different rules apply — the van benefit charge and possibly a fuel benefit charge come into play.)
- - The van must be genuinely used for the business, and keep the purchase invoice as evidence.
- - If you sell the van later, there can be a balancing charge — effectively clawing back some of the relief. It's normal and expected; just don't be surprised by it.
In short: buy a proper van (not a double-cab pickup that's really a car), claim AIA on the full cost in year one, and keep an eye on private use. It's one of the more generous reliefs in the system.
