Tax on Company Vans - Changes from 6 April 2005 A fact sheet for employees

 

From 6 April 2005, a lot of people will no longer have to pay tax on their company van. You will only pay tax if you use the van for private journeys other than journeys between home and work. If you are affected by this, please talk to your employer then get in touch with us so we can change your tax code to make sure you pay the right amount of tax.

What if I only use the van for work journeys?

If the only journeys you make in the van are work journeys – for example, delivering goods or making calls to customers – there is no tax charge.

What about journeys between home and work?

If you mainly use the van for work and the only journeys you make in it are work journeys and travelling between home and work, there is also no tax to pay.

How can I show there is no other private use?

Your employer must be able to show to the Inland Revenue that you don't have to pay tax. This means you could be asked to

• keep mileage records
• sign an agreement about the van use
• have use of the van put into a contract of employment.

Other private journeys

If you do make other private journeys in the van, you will be charged tax for this. However, if this private travel is insignificant (like taking an old mattress or other rubbish to the tip once or twice a year) then you will still not have to pay any tax.

If you are charged tax, the amounts you will have to pay tax on (normally collected using your Pay As You Earn (PAYE) tax code) are:

Year	Age of van	Amount included in your tax code	Tax at basic rate
2005/06	under 4 years	£500	£110
	4 years or more	£350	£77
2007/08	all vans	£3,000	£660

The amount is reduced if you do not have the van for the whole tax year, if someone else also uses it for private travel, or if you pay something for using it privately.

Fuel for the van

If your employer lets you have free or subsidised fuel for private use, you will have to pay extra tax from 2007/08. For a basic rate taxpayer this will mean paying tax of around £110.

Year	Amount included in your tax code	Tax at 22% basic rate
2005/06	nil	nil
2007/08	£500	£110

Please note: this fact sheet is for guidance only and reflects the position at the time of writing. Further information can be found here.