The number of vans on UK roads is increasing, largely as a result of internet selling and a greater need for delivery vehicles.
Where a van is available for an employee's private use, a tax charge arises based on a flat rate amount of £500 per annum or £350 if the van is more than four years old at the end of the tax year in question. A basic rate taxpayer pays a maximum of £110 per annum in tax.
Until 6 April 2005 this was charged irrespective of the amount of private use but, since then, travel from home to work and back and insignificant private use, such as going to the rubbish tip once or twice a year, is disregarded.
Private use beyond this still attracts a tax charge and, from 5 April 2007, this tax charge will be based on an annual amount of £3,000 with no reduction for older vans. Furthermore, there will be an additional benefit of £500 if free or subsidised fuel is provided for private use. This means a total potential tax charge of £770 per annum for a basic rate taxpayer.
Employees who only use their van for business journeys should be encouraged to maintain a mileage log. Without this they may have difficulty in satisfying HMRC that there is no private use.