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Taxing your van: Key things to consider

How taxing do you find road tax? It’s certainly no-one’s favourite thing to talk about; even accountants would struggle to get excited about it. Yet if you fail to understand some of the finer points, you could find yourself out of pocket – or worse, in trouble. Follow the rules, and you might not even pay any tax.

So, how does van tax work? Here’s our guide to get you more familiar with HMRC’s rules – and what you can expect to pay.

Firstly… do you actually have a van?

Now, this sounds like a silly question to kick things off with, but your definition of van, and that of HMRC, could be different. Basically, a vehicle must fulfil these two criteria:

  • It’s primarily built to move goods; and
  • Its gross weight, when fully laden, doesn’t exceed 3,500kg.

As a result, the likes of double-cab pickups and similar people transporters aren’t vans as they prioritise people, not goods; different rules apply, which we’ll address another time!

Secondly… do you only use it for work?

This is where things get interesting. There’s a phrase that crops up in HMRC’s guidelines: “Insignificant private use”. Essentially, what it’s saying is that if it’s business only – with certain exemptions – you won’t pay tax at all.

It means that aside from work use, you can commute to work and back, too, or pick up lunch for yourself. If you have an appointment when on the clock, then that’s largely fine too – as long as it isn’t miles and miles out of your way. However, if you’re planning on doing a night away, or picking your kids up from football, then that’s most definitely personal use.

 

Benefit in kind rules

This is where things get a little tricky. Going hand-in-hand with the phrase “insignificant private use” is “benefit-in-kind” (BiK). HMRC says your van does not have BiK if used solely for work, and that it’s provided to you by you, your company or employer. If you do drive your van privately, you have to pay BiK company van tax.

However, this might not be as steep as you may expect. Vans don't adhere to the same criteria as company cars in terms of scalable tax; the rate is fixed at £3,170. Then, it’s all based on your income. If you’re in the 20% tax bracket, you’ll only pay 20% of that sum – so just over £600 a year, or £50 a month. If you’re in the 40% bracket, it’s double that.

 

To learn more about company van tax, we’d recommend you check out the HMRC website, while the van tax calculator provided by Commercial Fleet will give you instant answers. 

 

 

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Representative Finance Example
Cash Price £13194.00
Deposit £2199.00
1st Monthly Payment £240.56
58 Monthly Payment £240.56
Final Monthly Payment £250.250.56
Amount of Credit £10995.00
Total Amount Payable £16642.60
Total Charge for Credit £10995.00
Fixed Interest per Annum 6.25
Duration 60 Months