The van benefit charge, often known as van tax, is payable on private mileage. If the fuel you use for private journeys is paid for by the company, you will also have to pay tax on that fuel. This is because it is treated as a benefit in kind. Her Majesty’s Revenue and Customs (HMRC) does make an allowance for ‘insignificant’ private mileage, but this does not permit any major detours from your route.
Van drivers can use a van for their daily commute and business purposes without having to pay any van tax provided that they do not also drive the vehicle for private use. Whereas the commute between home and work counts as private mileage for company car users, for van drivers the commute does not incur a tax liability.
For 2017/18, the total van benefit value is £3,230 for a conventional vehicle, £1,938 for an electric van. The amount payable is calculated by multiplying the total benefit value by your tax rate. If you are in the 20% tax bracket, you will pay 20% of the total charge, i.e. £630 for the year. Similarly, the total fuel benefit value is £598, which is multiplied by your tax rate to calculate the figure payable, so a 20% tax payer would need to pay £119.60 per year for private fuel.
The HMRC definition is:
A vehicle primarily constructed for the conveyance of goods or burden
A gross vehicle weight – fully laden – not exceeding 3,500kg
Pool vans are treated differently for tax purposes. Van tax is not usually payable on a pool van, provided that it can be demonstrated that the pool van is regularly used by more than one employee.
The amount of van tax payable may be reduced if the vehicle is only in use for part of the tax year. You may also qualify to pay a reduced amount if you pay a contribution for the use of the van for non-work journeys.
At Toomeys Basildon, our knowledgeable advisors will be happy to help if you need more information about van tax.