Understanding Company Van Tax
What is company van tax? For many, any mention of tax probably evokes feelings of long nights trying to get your documents in order to ensure everything is running as it should. If you’ve ever driven a company car, you know that tax is often hard to work out. It takes into account the fuel the vehicles it uses, its value and the emissions produced.
This often means you’re juggling with a lot of different numbers when trying to understand car tax. Thankfully driving a company van is a whole different ball game, and not as complicated.
Read on for Van Sales UK guide to understanding company van tax.
Do I Need To Pay Company Van Tax?
First off you need to see if HMRC defines your vehicle as a van. This may seem obvious but HMRC defines a van as:
- A vehicle primarily constructed for the conveyance of goods or burden
- A gross vehicle weight not exceeding 3500kg when fully laden
If what you’re driving doesn’t meet these two criteria, you may be looking at paying a different kind of tax. If it does meet these criteria, it’s time to learn about company van tax. But consider first, how are you using the van?
If you’re using the van completely for work with no private use, you’ll avoid a tax bill altogether. As it is a van used completely for work, there is no Benefit-in-Kind, or BiK, attached to the vehicle. However, if you’re using the van outside of work, then you must pay BiK company van tax.
You must pay company van tax if you’re using the van for ‘private usage’ that doesn’t count as ‘insignificant private use’. These are both HMRC terms that sound vague but are actually quite simple. ‘Insignificant private use’ covers the commute to and from work, quick detours to pick up something like lunch or a one-off trip to the doctors if needed.
If what you’re using your van for extends beyond this, then you are using your van for ‘private usage’. This includes shopping trips, taking the kids to school, road trips etc.
Company Van Tax Rate
Now it comes time to calculate your van tax. The BiK rate for vans is a lot simpler with a fixed price of £3170. If that sounds a lot, you actually won’t be paying that full amount. You calculate company van tax by taking your personal rate of tax times the fixed BiK sum of £3170. So a tax rate of 20% will have you paying £630 a year for your company van tax.
There is also a BiK rate if your company pays for fuel used for private purposes. This set price is £598 and involves the same maths as the tax rate, your personal rate of tex times by the BiK sum.
Van Sales UK
Looking for a new or used van on finance for your company. Get in touch with Van Sales UK today for a wide range of the latest model vans at great prices. Give us a call today on 0117 428 7721 to find out more.