Use of a Company Van

Employees will only pay tax on a company van that is made available to them if they actually use it for private journeys other than commuting. Previously, employees still incurred a benefit in kind charge if they received any form of private use of the company van, including home to work travel.

If you receive unrestricted private use of the vehicle, you are assessed on a PAYE benefit in kind totaling £3,000, with an additional fuel scale charge of £500 if your employer pays for private fuel. This could mean that from the 2009/10 tax year, a basic rate taxpayer who has private use of a van with company fuel will pay tax of £700 for the privilege. Private use other than commuting can be defined as using the van to do the supermarket shopping or using the van for social activities outside of work.

Therefore, as you only receive use of your van for home to work travel, your employer should ask you to sign an agreement stating you are permitted to use the van for ordinary commuting from home to your place of work, but all other private use is strictly prohibited. You must also ensure you keep mileage logs recording the reason for the journey and the number of business miles travelled in case there is an enquiry by HM Revenue & Customs.

Obviously, the tax charge for private use of a van is substantial for employees who, unlike you, use the vehicle for more than just commuting, so it is important your employer has all of the above procedures in place before the start of the new tax year to avoid an unwanted tax charge for their employees.

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.