Much like company cars (click here) being used for personal use, using the company van for private journeys will result in the employer and employee being liable for a benefit-in-kind (BIK) charge. If the company van is solely used for work purposes, there is no charge to pay. An important difference from cars is that commuting in the company van to the workplace is allowable and not liable to the BIK charge.
Vans used for private journeys
If you have a fuel powered company van that is used for private journeys, HMRC currently (24/25 tax year) have a flat BIK value in place, regardless of the make and model of the van.
You’ll need to report a standard value of £3,960 to HMRC via the P11D process. This can be reduced if:
your employee cannot use the van for 30 days in a row
your employee pays you to use the van privately
other employees use the van – in this case divide £3,960 by the number of employees
As per the normal BIK process this value is then multiplied by the employee’s tax rate, which results in their charge e.g. a 20% tax payer is liable to a charge of £792 per annum (£3,960 * 20%). The employer is liable to the Class 1 National Insurance rate, which is currently 13.8%, resulting in a £546 annual charge.
Van fuel for private journeys
If the employer is paying for the employee’s private fuel, you’ll need to report a separate standard value of £757 (24/25 tax year) to HMRC. Again, this can be reduced if:
the employee cannot use the van for 30 days in a row
your employee pays you back for all their private fuel
you stopped providing fuel during the tax year
The value is again multiplied by the employee’s tax rate to calculate their charge, and the employer is liable to the same 13.8% Class 1A National Insurance rate.
Zero emission vans
Zero emission and electric vans do not incur a BIK charge as the current rate (24/25 tax year) is 0%. You still need to report the van on the P11D though.
This article is designed as a brief introduction to the topic and everyone’s situation is always unique. If you have any questions or would like some advice on your own situation, please submit a message on the contact page (click here) and I will be happy to help.
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