Private Use of A Company Van

Employees only pay tax on a company van made available to them for private use if they actually use it for private journeys other than commuting (travelling between home and the main place of work).

The taxable benefit in kind for unrestricted private use is £3,000 and this means 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 for purely private journeys, such as going shopping or for social activities.

If you also receive free or subsidised fuel, a further benefit in kind of £500 will be due, resulting in a further tax liability of £100 for a basic rate taxpayer.

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.

Date published 5 Dec 2012

This article is intended to inform rather than advise and is based on legislation and practice at the time. 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 article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.