What to know about company van tax

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The tax applied to company vans varies according to how the vehicle is used. Understanding the differences is important to ensure that you are paying the right rate and to prevent hefty fines coming your way.

Table of Contents

Company van tax explained

Company van tax is a form of Benefit-in-Kind – BIK – tax, which is levied on employee benefits and perks received in addition to a salary. This includes access to vans, but is only applied if the vehicle is driven for private use. No BIK tax is payable on vans that are used as pool vans or exclusively for business.

Calculating company van tax

A single tax rate is used for this, unlike company cars where tax is paid according to a sliding scale relating to CO2 emissions, fuel type and car value. Company van tax will only apply to vans, LCVs, and pick-up trucks that have a gross vehicle weight of 3,500kgs or more and are primarily made for carrying burden or goods. This may be an important factor to consider when researching used vans for sale Oxford or choosing a van from companies such as Cotswold Van Centre.

BIK rates

HMRC’s flat rate van benefit charge was £3,960 at the time of writing. The exact amount you pay is based on your level of personal income tax. For example, a 20% tax rate will mean paying 20% of the BIK rate.

Company van tax exemptions

‘Insignificant’ private journeys are not counted for BIK tax purposes. This includes things like picking up a sandwich on the way to work or stopping to post a letter. ‘Significant’ private use is counted, however, and includes using the van for the likes of shopping trips or school runs. If a van is driven for private use, the driver must pay BIK company van tax and the employee must notify HMRC. To ensure you pay the right amount of tax for all journeys, it is important for both you and the employer to make and keep mileage records and journey details.

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