General and background information
A van is defined as a vehicle primarily built to carry goods which does not exceed a maximum fully loaded weight of 3,500 Kgs. This weight limit excludes heavy goods vehicles being classified as vans.
The benefit for company vans available for unrestricted private use is reviewed by HMRC each year – please refer to the HMRC web site for the latest charge. If the van is shared this charge should be reduced on a just and reasonable basis. There is an accompanying van fuel charge (also reviewed annually) that needs to be applied.
Company van legislation allows some private use to occur. Company van drivers are allowed to take vans home to their ordinary home to work commute without incurring a charge. This is defined as restricted private use and can include insignificant private journeys such as minor detours on the way to work for the driver to buy a newspaper. However if company van is used by the driver whilst on holiday or to make the weekly supermarket shop then this is not deemed by HMRC to be insignificant and the charge applies.
An employee who has two or more vans available for private use at the same time will pay tax on the standard amount for each van. The standard charge is reduced pro rata for periods when vans become unavailable part way through the year or are incapable of being used for 30 or more consecutive days. Contributions for private use made by the employee will reduce the charge on a pound for pound basis.
The standard charge is the same as for an unshared van. This charge is divided, on a reasonable basis, among the employees who had use of the van for the period it was available.
The current standard van fuel benefit charge is charged in addition to the van benefit charge for any private fuel provided. The fuel benefit is only chargeable if the van benefit charge arises. It is reduced for periods of unavailability or for shared vans in a similar manner to the van benefit.
- A tapered Van benefit charge will arise for vans with a zero emission rating, including electric vans. See notes below
- Vans available only for business, ordinary commuting and insignificant private journeys are not treated as taxable benefits and the scale charges do not apply. Do not report these vans on Form P11D
- Insignificant private use means occasional journeys for example a trip to dispose of old furniture. Note that HMRC regards weekly shopping trips as not insignificant so the tax charge would apply to such vans.
- Employers should be able to provide evidence regarding the use of the vans and a vehicle log of journeys undertaken in the van would help to provide this. Additionally, and where practical, employment contracts should include a clause or terms and conditions which formally specify that the vans is not available for general and private usage, so as to exclude any such use that creates a chargeable benefit in kind taxable on the driver.
- Legislation introduced in the 2008 Finance Bill ensures that reimbursement of private fuel costs for vans will not be treated as earnings for tax purposes. The same rules have effect for the provision of van fuel for private use as those that have effect for company car fuel.
- Class 1A NICs are payable on van benefit.
P11D Form: Section G
Vans and van fuel
Van benefit charge
The charge is reduced for periods when a van is unavailable. Any payments by a director or employee who are required to use the van for private use and have been paid in the tax year are then deducted. If 2 or more directors or employees share private use of the van, the standard charge for each should be reduced on a just and reasonable basis.
If the employees sharing the van are members of the same family or household and one of them is in an excluded employment, the fact that the van is available to that person should to be disregarded when making the sharing reduction to the benefit charge on the other employees.
Additional notes and guidance on Zero Emission Vans
The current van benefit charge exemption for zero emission vans is being phased out from April 2015 Legislation introduced in Finance Bill 2016 has amended subsection 155(1C) (b) to (e). The measure amends existing legislation to apply the level of the van benefit charge for zero-emissions vans at
- 20% of the charge for conventionally fuelled vans for the tax years 2016 to 2017 and 2017 to 2018.
- 40% of the van benefit charge for conventionally-fuelled vans in 2018 to 2019.
- 60% of the van benefit charge for conventionally fuelled vans in 2019 to 2020,
- 80% in 2020 to 2021 and
- 90% in 2021 to 2022.
From 2022 to 2023, the van benefit charge for zero emission vans is 100% of the van benefit charge for conventionally-fueled vans.
Read Expenses and benefits: company vans and fuel for further information.
Van fuel benefit charge
The van fuel benefit charge is charged on all vans when any private fuel is provided and the van benefit charge (before any reductions) is more than zero.
The rules in section F of the P11D under ‘Car fuel benefit charge’ apply equally to the van fuel benefit charge.
Read chapter 13 of booklet 480 - an expenses and benefits guide for further information.
Additional HMRC Documentation and external help
Click the links below to go directly to the HMRC website to download or view the PDF or help files listed below:-