There are a number of tax consequences to be aware when employees are provided with company vans and fuel. A company van can be defined as a van made available to an employee by reason of their employment. There is usually nothing to report to HMRC if the van is used solely for business journeys, as a pool van or for vans provided as part of a salary sacrifice arrangement. If the van is not exempt then employers must report the cost on form P11D and pay Class 1A National Insurance on the value of the benefit.
Where the private use of a company van is ‘insignificant’, no tax is payable. The definition of insignificant is quite rigid and only applies where private use is exceptional, intermittent, irregular and lasts for short periods of time or happens on odd occasions throughout the year. Examples might include making a detour to drop children to school or using the company van occasionally to take rubbish to the tip.
Where a company van is used for private journeys there is a standard benefit charge for the private use of a company van of £3,350. There is an additional benefit charge of £633 if fuel is provided for significant private use. If private use of the van is insignificant then no benefit will apply.
A van benefit charge also applies for zero emission vans. This rate is tapered and will increase each year until the tax year starting 6 April 2022. The rate for 2018-19 is 40% of the full rate, meaning that 40% of £3,350 i.e. £1,340 will need to be reported. When the transitional steps are completed in 2022-23, the van benefit charge for zero emissions vans will mirror that of conventionally-fuelled vans.