Did you know that there are taxable benefit charges for using your businesses work van for private use? If you want to find out more, then continue reading our blog below.
What do I need to know?
If an employee is using their company’s van for private use, then there will be a taxable benefit, followed with a tax charge.
What are the charges?
From 6 April 2019, the flat-rate benefit charge has increased from £3,350 to £3,430.
If you are an employee and are provided with fuel and access to the company van for private use, then there will be a tax charge on the fuel, which is based upon the annual fixed rate.
For 2019/20 the flat-rate van fuel benefit charge has been increased from £633 to £655.
What are the conditions?
If you are wondering what qualifies as a van, then the following conditions apply:
- It must have four wheels (not a motorcycle)
- Constructed for the use of carrying goods
- A mechanical propelled road vehicle
- Have a designed weight which does not exceed 3,500 kg
It is also worth noting that a vehicle such as a minibus is not eligible to be classed as a van as it is designed to carry people not goods.
If a van is used as a pool van and meets the following criteria, then there will not be a benefit-in-kind tax charge:
- The van is not normally kept near the employees’ home
- The van is used by more than one employee
- The van is accessible to everyone and there are no exclusions
What journeys are classed as non-taxable business use?
- Commuting – travelling to and from home to work
- Business journeys – journeys that the employee makes to carry out their employment duties
- Insignificant private use outside of basic commuting – making a detour to buy breakfast
What are the tax charges?
The benefit charge applies regardless of the employee’s earnings rate.
There are some deductions that may reduce the amount of tax required to pay, such as if the van is only available for some parts of the year.
For 2019/20 – a basic rate taxpayer will pay tax of £686 for using the work van.
For a higher rate taxpayer, the cost of using the works van for personal use will be £1,372.
If fuel is also used, the taxpayer will also pay:
- Basic Rate – £131
- Higher Rate – £262
When will I be charged?
A charge to income tax will be made when the company van is available to the employee for non-business-related use.
Tax is normally collected through the employee’s PAYE code.
If you are allowing your employees to use your businesses vans for personal use, then it is important that you and your employees understand the tax charges that will apply.
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