Produced by Tolley in association with Philip Rutherford
  • 28 Oct 2021 10:01

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

  • Company vans
  • Introduction
  • What is a van?
  • Exemptions
  • Business use only
  • Commuting
  • Insignificant private use
  • Normal course of business
  • Emergency vehicles
  • Lower-paid minister of religion
  • More...

Company vans

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, no taxable benefit arises.

A benefit in kind charge arises on an employee under the company van provisions if all of the following steps apply:

  1. there is a van (see EIM22725)

  2. it is made available (see EIM23200)

  3. to an employee or director (or member of their family or household, see EIM22760)

  4. for private use

  5. the van is made available without transfer of ownership (see EIM23205)

  6. the van is provided by reason of the employment (see the Non-cash earnings ― overview guidance note and EIM23250)

ITEPA 2003, ss 114, 115

This guidance note discusses the provision of vans from both the employee and the employer’s perspective and how and when tax consequences arise. For consideration of whether a fuel benefit arises please see the Fuel ― company vans guidance note.

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:

  1. is a goods vehicle

  2. 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. There is therefore a planning opportunity for an employer to provide a vehicle which qualifies as a van rather than a car when this is appropriate to the employee and their job role; this would give savings for both the employer and employee.

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

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