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Company Vans – Are They Tax Efficient?

Driving a van as your company vehicle has tax advantages. The tax charge is lower than for a company car. In fact, there may be no tax charge at all.

What are the conditions for tax-free use?

The restricted private use condition must be met to ensure that there is no tax charge. This applies to both the use of the van and the provision of fuel by the employer.

The restricted private use condition is that the employer only permits an employee to drive the van for business purposes. Ordinary commuting is travel between home and a normal place of work and this is a business journey for this purpose.

The private use of a van doesn’t trigger a tax charge where the private mileage is “insignificant”.

What counts as insignificant?

  • no more than a few days over the tax year
  • not for a number of consecutive days
  • it must be intermittent and irregular
  • it is the exception in terms of pattern of use

To make use of the restricted private use exemption, have a written policy that the van isn’t to be used for private journeys except where they are insignificant

Without this, the employee will be subject to tax based on the following:

  • The flat rate taxable for 2018/19 will be £3,350.
  • The fuel benefit will be £633.

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