Tax on company vans
HMRC have published an uptodate summary of the tax implications of company vans for both businesses and employees.
A van is defined as a vehicle built primarily to carry goods or other loads with a maximum laden weight of up to 3,500kgs. Where such a van is provided to an employee by reason of their employment it is known as a ‘company van’.
Where employees use a company van for private purposes, they may be liable to pay tax on any private use of the company van. Where private use comprises only commuting between the place of work and home or there is insignificant private use, no tax is payable. The definition of insignificant is quite rigid and only applies where private use is exceptional, intermittent, irregular and lasts for short periods of time or happens on odd occasions through the year. Examples include making a slight detour to drop children at school or using the company van occasionally to take rubbish to the tip.
Regular use of a company van such as for a weekly shopping trip or for social activities is private use and liable to tax. A flat rate benefit of £3,000 is used in this context. Employees wishing to avoid such a charge should keep and retain detailed mileage records to evidence the insignificant nature of any private use.
Employees are also subject to tax (on a falt rate benefit of £500) if free or subsidised petrol is provided. Employers pay Class 1A National Insurance on the same amounts.