The Department of Environment and Local Government recently issued a clarification to all Local Authority Tax Offices, on the issue of taxation of N1 commercial vehicles that have more than two passenger seats.

Some offices insisted that these vehicles were taxed as cars at very high rates, even though they had N1 commercial vehicle designation. This was causing problems for some farmers trying to tax their N1 commercial vehicles when they were 4x4s with five seats and full commercial classification.

In a letter, dated 18 March, to all Local Authority Tax Offices, the Department confirmed that previous requirements to remove all seats and seat belts to the rear of the driver’s seat and weld over seat bolt holes, no longer apply to goods vehicles for road tax purposes. The Society of the Irish Motor Industry (SIMI) pressed for a resolution, as some buyers had been reluctant to collect their new vehicles until this issue had been resolved.

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In a number of cases, vehicles were refused commercial vehicle road tax rates even when the owner had confirmed that the vehicle would be used entirely for commercial purposes.

In order for a vehicle to be eligible for road tax at the goods rate, the vehicle must be constructed as or adapted to an EU vehicle classification of N1, N2 or N3.

The new generation commercial 4x4s with five seat capacity are in this N1 classification, offering the option of VAT refund and a lower annual road tax rate of €333.