All employees will only pay tax on a company van made available to them for private use only if they actually use it for private journeys other than commuting. Before April 2005, employees still had a benefit in kind charge applicable if they received any form of private use of the company van, including home to work travel.
The taxable benefit in kind for unrestricted private use increased to £3,000 from April 2007, and will mean that a basic rate taxpayer who has private use of a van will pay tax of £600 per year. Private use is classified as using the van to do the supermarket shopping or using the van for social activities outside of work. If you also receive free or subsidised fuel, and further benefit in kind of £500 will be due, resulting in a further tax liability of £100 for a basic rate tax.
However, employees who have to take the company van home, but are allowed no further private use, or have insignificant private use, will not be subject to a benefit in kind charge. Examples of insignificant use include an employee who stops at a newsagent on the way to work or calls at the dentist on the way home.
If this does apply, ensure you keep mileage records relating to the use of your van, ask your employer to amend your contract of employment, and ensure you sign an agreement about the van use only being allowed for home to work travel.
By Jo Nockels
Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.