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CLIENTS page
CLIENTS page
If a van (up to 3.5 tonnes) is made available to an employee or a director, and the van is used for private purposes, a van benefit charge of £3,960 will arise for the tax year 2024/25 (2023/24 - £3,960), irrespective of age. In addition, where an employer pays for fuel used on private journeys in a van, there will also be a van fuel benefit charge in 2024/25 of £757 (2023/24 - £757). For electric vans, the BIK is £Nil for tax year 2024/25 (2023/24: £Nil)..
When does a van benefit not arise?
A van benefit will not arise in the following circumstances:
- The van is used for business journeys only and as part of an employee’s employment duties, such as journeys between appointments by a service engineer.
- The journey is related to an employee’s attendance at a temporary workplace.
- The employee uses the van (in addition to business journeys) for ordinary commuting between his home and his permanent workplace.
- The employee’s other private use of the van, other than for ordinary commuting, is insignificant.
What counts as insignificant use?
Insignificant other private use relates to an exception to normal usage that lasts for short periods on an occasional or irregular basis. Examples would be making a slight detour to buy a newspaper on the way to work or to a recycling point or rubbish tip to drop off waste.
What counts as private use?
According to HMRC guidance, private use includes using the van to do the supermarket shopping each week, taking the van away on a week’s holiday or using the van outside of work for social activities.
Employer’s reporting requirements
Where there is private use of a van, and fuel is provided for private purposes, this has to be reported as a P11D benefit in kind. There will also be Class 1A NIC payable at 13.80% on the van and van fuel benefit in July following the end of the tax year.
For example, if an employee is provided a non-electric van on which there is private use and the employer also pays for private fuel, then for the tax year 2024/25:
Benefit in kind on employee = £3,960+£757 = £4,717 and the employee will be taxed on this at his marginal tax rate.
Class 1A NIC is also payable by the employer = £4,717 x 13.80% = £650.95 (payable by 22.7.2025).
Van Benefit
VAN vs CAR
For directors (or other employees), using a van in a business over a car can have tax advantages provided you are willing forego the enjoyment, or otherwise, of a car. This is because they are classed as commercial vehicles on which different tax rules apply. Tax advantages can include lower benefits in kind, resulting in lower tax for both the employee and the company, recovery of the VAT on the van and the availability of 100% capital allowances.
Some manufacturer’s have developed vehicles that are classed as commercial vehicles such as car-derived vans and vans with rear seats - combination vans, or combi vans. A list of such vehicles is provided on the HMRC website.
Vans with a second row of seats such as double cab vans provided they have a payload of one tonne are also classed as commercial vehicles.
