What You Need To Know About Van Tax

Ford Transit

If your job provides you with a van for work purposes, but offers you the option of using this van for private reasons as well, you need to be aware of the tax laws. Private use of a company van means a tax charge, and here is everything you need to know about it.

What’s the charge for?

Anyone who uses a , or company provided/subsidized fuel that comes with it, for private use.

What is a company van?

A company van is a vehicle that is not owned by the employee, but is made available to them for reasons of their employment. It is built primarily to carry goods up to the weight of 3,500 kilograms.

What constitutes private use?

HMRC define private use of a vehicle as any use which falls outside of work or business responsibilities. They differentiate between significant and insignificant private use and state that private use is insignificant if it ‘is very much the exception to the rule’, ‘is intermittent and irregular’ or ‘last only for short periods of time on odd occasions during the year’.

How much is the tax?

The fee is £3,000 per year for the private use of a company van. Free or subsidized fuel used privately will cost a tax charge of £564 per year.

Are there exceptions?

Yes. Insignificant private use is not taxable. This covers once or twice yearly trips to the rubbish dump made using a company van, for example, or personal-related detours made on the way to and from work. Using the company van for holidays, or to make regular shopping trips does count as significant use, and therefore requires you to pay the tax.

How do I prove I don’t use the van privately?

Employees who have access to a company van are required to provide mileage records or a signed agreement with their employer about the use of the van to prove they are not using it privately.

What if the vehicle is not used full time?

The tax is reduced if an employee does not have access to the company van for the full tax year. Detailed records must be kept to determine this reduction.

What do employers need to do?

If an employer does not believe there is a charge to pay, as the company van is not for private use, or believes an employee need not pay the full tax amount, as the vehicle is only accessible some of the time, they must keep accurate records showing such. Proof will be required by HMRC.

The information contained on this web page is for general information purposes only and does not constitute legal or other professional advice.  Direct Line for Business does not accept liability for the information contained on this web page, nor does it make any representations or warranties as to the completeness, accuracy or suitability of such information.

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