VAN tax: do you have to pay it?
Well yes if you use a company van for private mileage, then you must pay company van tax.
It’s known as a benefit in kind.
In Budget 2015 the Chancellor raised the company van tax rates so that the annual tax liability for any type of company van is £3150; it was £3090.
So the annual company van tax bill for a 20% tax payer will be £630 (up from £618).
If the company that provides you with the van also pays for your private fuel then you will be taxed on this, too.
The annual tax liability for so-called ‘free’ fuel is now £594 (previously £581).
So a 20% income tax payer will be charged 20% of £594 for ‘free’ fuel, which is £119 per year. That’s in addition to the £630 company van tax.
Company van tax
- Annual tax liability is a fixed rate of £3150
- You pay tax on this at your rate of tax – 20% or 40%
- So van tax works out at £630 for a 20% tax payer or £1260 (40% tax payer)
- The free fuel benefit charge is £594
- So the combined company van tax and free fuel tax is £749 (20%) or £1498 (40%)
- Company van tax is formally called the Van Benefit Charge
Can I escape company van tax?
Yes you can.
If you cover no private mileage in the van, then HMRC doesn’t count this as a benefit and you will not have to pay company van tax.
The taxman does not count driving the van between home and work as private mileage (unlike a company car driver, for example).
So if you take the van home at night and do no other mileage, you do not have to pay company van tax. Hurrah!