Author: Ralph Morton

IF you have a company-provided van and cover private mileage in it, then you are liable to pay company van tax. The same benefit-in-kind tax is also applied to double-cab pick up trucks.

The good news from the Budget, though, was that the amount of company van tax has been frozen at £3000.

If you also receive free fuel for private mileage, then that ‘free’ fuel benefit has also been frozen at £550. From April 2013, that free fuel benefit for vans and double cabs will rise in line with RPI.

So if you pay tax at the rate of 20%, the amount of company van tax you will pay is £600 (20% multiplied by the £3000 benefit-in-kind figure). If you receive free fuel for private use, then the tax you will pay on that will be £110, giving a total of £710.

For a 40% tax payer in, say, a double cab pick up, then the amount of company van tax payable is £1200, and the free fuel benefit is £220, giving a total of £1420.

Do you have to pay company van tax?

Not if the only private travelling you do is the commute from home to work, because HMRC recognises that it’s often easier for workers to keep the van at home overnight. HMRC also allows some insignificant private use, too. For example, maybe two trips to the municipal dump a year, or takes a slight detour on the way to work to drop off a child for school.

However, if you regularly use the van for trips to the supermarket, then this is considered private mileage and you will be liable for benefit-in-kind company van tax.

For small businesses that operate a small fleet of company vans, in order to ensure that your drivers aren’t liable for company van tax – and your business for National Insurance payments on the tax –  HMRC suggests that mileage records of the vans are kept or staff sign an agreement about the use of the van.

Company van tax is not applicable to sole traders who own their vans or double cab pick ups.