What is Company Van Tax?

A company van is classed as a benefit in kind by HMRC if the van is used for private journeys.

If you receive a company van benefit in kind you will qualify for company van tax and be given a P11D by your employer to confirm the taxable value of your company van benefit.

When you first start receiving a company van benefit in kind your tax code will be reduced by HMRC usually resulting in more income tax being deducted from your salary.

Company van tax is calculated differently to a company car benefit and is generally simpler to work out and explain.

We explain below the rules around company van tax and how much more tax you will pay if you receive a company van BIK.

Who qualifies for Company Van Tax?

HMRC state that if you use a company van it will be classified as a benefit in kind if the van is used for private journeys by you or a member of your family/household.

If you use your company van for journeys other than commuting to and from work your employer will need to inform HMRC that you have a company van benefit in kind.

A place of work can be one permanent location or temporary workplaces for example a delivery driver.

HMRC does give some flexibility to the private use rule stating that insignificant private use will not be seen by them as a private journey.

An example of an insignificant journey given by HMRC is taking a detour to pick up a newspaper on the way to work.

What Vans are exempt from Company Van Tax?

The most common reasons for a company van being exempt from being a benefit in kind are:

• Zero rated for emissions.
• Used as a pool van.
• Used only for business and commuting journeys.

You would normally be exempt from company van tax if your circumstances meet any of the above and your employer will inform HMRC for you as part of their payroll obligations.

What are the Company Van BIK rates?

The company van BIK rate for a full tax year is £3600. Unless your van is zero rated the benefit in kind rate is fixed at £3600 for all company vans with no exceptions.

You will have to pay tax on the £3600 benefit in kind at a rate of 20%, 40% or 45%.

For example if you are a basic rate taxpayer (paying tax at a rate of 20%) you will pay an extra £720 in tax per tax year.

The benefit in kind rate can be reduced in some cases if any of the following apply:

• You cannot use the van for 30 days in a row.
• You pay your employer to privately use the van.
• The van is used by other company employees.

Your companies payroll department should inform HMRC directly if any of the above applies to you.

What is the Company Van Fuel Benefit Tax?

The company van fuel benefit charge is £688 per tax year and is applicable when fuel is provided by your company and the van is used for private use.

If you don’t use your company van for private use the fuel benefit charge should not be applicable.

The £688 van fuel benefit is a standard charge and in addition to the benefit in kind of £3600.

Tax is payable on the van fuel benefit charge at whichever rate you pay tax. The fuel benefit can be reduced in cases where:

• You are unable to use the van for 30 days in a row.
• You pay your employer back for all of the private fuel used.
• Your employer stopped providing fuel during the tax year.

Company Van P11D

A company van benefit in kind needs to be declared on P11D which is produced by an employer and given to HMRC and the individual who receives the company benefit.

You should receive your P11D around May time from your employer and it will show the company van benefit charge and fuel benefit where appropriate.

Like all company benefits its important to let HMRC know if you stop receiving the benefit as soon as you can so they can adjust your tax code accordingly.

If you don’t you will continue to pay tax on a company benefit that you no longer receive meaning you will pay too much tax.

What is Electric Company Van Tax?

Electric vans are zero rated which means company van tax is not payable. The company van benefit still needs to be shown on a P11D but it will show the value as £0 because the van is zero rated.

Electric company vans don’t have a charge for private use either which means they can be used for personal mileage tax free.

Company Van VED road tax

Another type of tax related to a company van is vehicle excise duty (VED) also know as road tax.

Collected by the DVLA the VED for most vans is £290 annually or £304.50 if you pay by monthly direct debit.

Electric van road tax is zero because of it’s low emission rate rating. This will change in 2025 when the government have announced increases in VED for electric vehicles.

If you receive a company van you would not normally have to pay for the road tax with it usually being paid for by your company.