A van which is made available to an employee (or a Company Director) is considered by HMRC to be available for private use unless the terms on which the van is provided prohibit its private use and no private use is actually made of it (so it’s a good idea to check employment contracts).
This means that the mere prohibition of private use is not in itself sufficient to prevent a tax charge; it is also necessary to show that a van is not used for private motoring. The charge is nil if both the following requirements are satisfied throughout the year (or part of the year depending on when the van is available to the employee):
If one of the requirements is not met the charge for 2015/16 is £3,150 and for 2016/17 the benefit increases to £3,170 per van. There is also a fuel benefit.
The word ‘insignificant’ is not defined, so takes its normal meaning of ‘too small or unimportant to be worth consideration’. Private use is to be considered insignificant if for example an employee who uses a van:
Private use by an employee that is not insignificant (and would trigger the benefit charge) is for example:
It’s also worth making sure that when an employee has a van its truly a van within the definition as if the vehicle is considered to be a car the likelihood is that it would trigger a much higher scale charge.
For more information on the rules surrounding this or anything else, please feel free to contact me
This means that the mere prohibition of private use is not in itself sufficient to prevent a tax charge; it is also necessary to show that a van is not used for private motoring. The charge is nil if both the following requirements are satisfied throughout the year (or part of the year depending on when the van is available to the employee):
- The van must only be available to the employee for business travel and commuting – it must not in fact be used for any other private purpose except to an insignificant extent, and
- The van must be available to the employee mainly for the employee’s business travel
If one of the requirements is not met the charge for 2015/16 is £3,150 and for 2016/17 the benefit increases to £3,170 per van. There is also a fuel benefit.
The word ‘insignificant’ is not defined, so takes its normal meaning of ‘too small or unimportant to be worth consideration’. Private use is to be considered insignificant if for example an employee who uses a van:
- Takes an old mattress or other rubbish to the tip
- Regularly makes a slight detour to stop at a newsagent on the way to work
- Calls at the dentist on the way home
Private use by an employee that is not insignificant (and would trigger the benefit charge) is for example:
- Using the van to do the supermarket shopping each week
- Taking the van away on a week’s holiday
- Using the van outside of work for social activities
It’s also worth making sure that when an employee has a van its truly a van within the definition as if the vehicle is considered to be a car the likelihood is that it would trigger a much higher scale charge.
For more information on the rules surrounding this or anything else, please feel free to contact me
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