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Company Van Tax: It doesn't have to be taxing

17 Jul 2020

Taxation for company cars and company vans is different. While company car tax is based on a combination of the vehicle list price and CO2 emissions, the tax rules for vans are much simpler.

When drivers only use a van for work and what Her Majesty’s Revenue and Customs (HMRC) describes as ‘insignificant private use’ no tax is payable. This is because HMRC does not class the van as a taxable benefit, known as a Benefit in Kind (BiK). 

However, if a driver uses their van for ‘significant private use’ they will have to pay tax.

What is ‘insignificant private use?

Insignificant private use covers commuting directly to and from work, although drivers can, for example, stop off en route to pick up a newspaper, or take a one-off trip to the dentist. But that’s about all. Full details can be found on the HMRC website.

What is ‘significant private use’?

If your drivers use their van to carry out regular shopping trips or school runs, or they take the van out in the evening, this is deemed as ‘significant private use’ and your company must notify HMRC

Your drivers should keep detailed mileage records broken down into private and work journeys. You will need to report this information to HMRC and add the value to the drivers P11D. More information can be found on the HMRC website.

Please download and read the full document to read more.

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