Company vans

By Tolley in association with Philip Rutherford
Employment_tax_img4

The following Employment Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Company vans
  • Introduction
  • What is a van?
  • Exemptions
  • Amount of taxable benefit
  • Reporting the benefit
  • Salary sacrifice and similar arrangements

Introduction

The tax rules relating to company vans are reasonably simple compared with the company car rules. Generally speaking, where vans are provided for business use with only small amounts of private use then no taxable benefit arises.

This guidance note discusses the provision of vans to employees and how and when tax consequences arise. For consideration of whether a fuel benefit arises please see the Fuel ― company vans guidance note.

ITEPA 2003, ss 62–226E, Part 3
What is a van?

There is a definition of a van within ITEPA 2003, s 115(2). A van is a mechanically propelled road vehicle which is not a motor cycle and:

  • is a goods vehicle
  • has a design weight not exceeding 3,500 kilos (above this weight the vehicle counts as a heavy goods vehicle (see the Heavy goods vehicles guidance note)

Compared to a car, a van attracts a lower level of tax and NIC.

Probably the most contentious issue within the taxation of company vans has been with the increased use of 4x4 vehicles and SUVs. It is becoming increasingly common for HMRC to take a critical look at such a vehicle is actually a van. With the dramatic difference in the amount of tax at stake for a car as opposed to a van this is hardly surprising and has been tested by HMRC. A Land Rover Discovery was held to be a car under ITEPA 2003, s 115 even though it was significantly modified to meet with business requirements. In thatcase (T Jones v HMRC), a mobile worker was provided with a highly modified Land Rover for the purposes of carrying out his duties as a roadside mechanic. Initially the taxpayer had

More on Cars, vans etc: