HMRC will typically classify any light commercial vehicles (LCVs) that are under 3500kg in weight as a van for taxation purposes. It's worth noting that some passenger vans that have an extra row of seats and car-derived vans could be considered as a car so we recommend checking the vehicles V5 registration documentation and looking at the European classification. Those listed as N1 or N2 will be classed as commercial and taxed as a van while those with an M1 or M2 classification will be considered dual-purpose and taxed as a car.
This guide is specifically designed to look at company van tax. If you have a company car then you should take a look at this guide which explores company car tax and how this applies to your vehicle.
What is Company Van Tax?
Company van tax is a benefit in kind (BIK) tax that drivers will pay on a van that is owned or leased by the business and available for them to use for private travel as well as business journeys.
The amount you will pay as the driver will vary based on your individual tax rate as well as other factors. There’s a full breakdown of how you calculate this below.
When Do I Need to Pay Company Car Tax?
Just like with a company car, if the van is only used for business purposes then you will not need to pay a BIK tax on it.
Driving to and from your place of employment will usually be classed as travelling for business purposes.
Most companies fit their vehicles with tracking devices as a security measure and this can also be used to see if the vehicle is used for personal journeys.
Drivers of a van who are self-employed or a sole trader will also not need to pay a company van tax on their vehicle.
Otherwise, if you are driving a van provided to you by your company and regularly use this for your own personal journeys then you will need to pay company van tax on the vehicle.
How to Calculate Company Van Tax
Unlike with cars where the company tax can vary depending on the vehicle’s value and emissions, company van tax has a flat BIK rate which is currently at £3,500.
As the driver this is not the amount you will pay. Instead, you pay a percentage of this about based on your personal tax rate. If you pay 20% tax then you will pay 20% of £3,500 which is £700 over the course of the current tax year, which will usually be deducted from your pay in monthly payments.
Company Van Tax FAQs
What Qualifies as a Van According to HMRC?
How Much Does Company Van Tax Cost?
The amount you pay in company van tax will depend on your tax bracket as it is calculated based on your personal tax rate.
You will currently need to take a percentage of £3,500 and this percentage will be your tax rate percentage.
Do Electric and Zero Emission Vans Still Pay Tax?
For the current tax year of 2022/23 drivers of zero emission vans will not need to pay company van tax. So if you have a fully electric van then you will not need to pay this.
Are There Any Exemptions to Company Van Tax?
If you use a company provided van but only for business travel then you will not need to pay company van tax as it is only applicable on vehicles used for personal travel.
Additionally, if you are self-employed or you are a sole trader then you will not need to pay company car tax on the van you are driving.
Are there Scenarios That Will Reduce Van Tax?
As company van tax is based on a fixed BIK value there is no way to reduce the amount you pay.
For more of Wessex Fleet’s helpful guides head back to our driver guide homepage. including guides to company fuel tax and what happens at the end of a lease agreement.