… the definition of a company van
in the eyes of the HMRC is any vehicle with a maximum laden weight of
up to 3,500 kilogrammes. Secondly, a company van is a vehicle made
available to an employee by virtue of the tasks they are employed to
How do I know if the employee has private usage?
Employees have to pay tax on a company van if they have significant
private use of the vehicle. Significant use is defined as use and
availability for holidays, regular supermarket shopping, and/or regular
weekend use, to name but a few.
Whilst on the reverse, private use is deemed to be insignificant
- The private usage is the exception
rather than the norm
- Trips made are irregular, so the ad
hoc trip to the doctors
- Lasts for short periods of time on
odd occasions in the year
How much will the tax bill be?
Remember tax is personal so it is the employee that will become
liable and therefore the taxable amount levied on each employee for
private use will be £3,000 for the use of the van and a further £500 if
fuel is also provided. As the Employer you will have pay Class 1A
National Insurance contributions on these amounts as well.
So if your employees have access to their vans and use them for
personal use, the way the employee can reduce the tax liability
is by them contributing towards the cost of the private usage. Sadly,
they and you cannot avoid the fuel tax and employer national insurance
contribution unless the employee pays the full amount of £500 towards
The tax liability can be reduced if another employee has use of the
van for part of the year or does not have full use of the van for the
whole year for any other reason.
What are my responsibilities as the Employer?
As the Employer, it is your responsibility to put systems and
records in place to aid your annual returns. We recommend that you:
- ask all vehicle drivers to record mileage undertake and keep
records of mileage to show where the van has been used.
- get the employee to sign a disclaimer letter stating that the
van will only be used for work purposes and that should any tax become
payable, the employee will have to pay all tax amounts including the
Employers NI contributions. This letter should be renewed each year.
- include use of van details in the employment contract and
consider having a vehicle policy devised.
- track who is using the van on a monthly basis and in what
proportions, including periods of 30 days or more where the van was not
Further guidance on the taxation and employer duties relating to
Company Vans can by found if you log onto the HMRC website at www.hmrc.gov.uk/vans
If you would like your employment
documentation reviewed in line with the recommendations above, give
us a call on 0845 6100 651.'
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