Introduction
Currently (up to 5th April 2005) employees who have private use of a company van ( which included home to work travel ) are charged to tax on a benefit in kind of £500 (or £350 if the van is over 4 years old). (tax payable: at basic rate £110 / £77).
CHANGES FROM 5TH
APRIL 2005 (and 5th April 2007)
From 6th April 2005
you will only pay tax if you use the van for private journeys other than journeys
between home and work.
If you are claiming
that there is no private use (other than home to work) then your employer must
be able to show to the Inland Revenue that you do not need to pay any tax.
This means you may be asked to
If there is private use
If you do make other private journeys in the van you will be liable to a tax charge. However, if the private travel is insignificant ( such as an annual visit to the dump ) then you will still not have to pay tax. You should be clear that it is your responsibility to prove there is no significant private use.
If you are charged tax, the amounts you will pay tax on are:
| Year |
Age
of van
|
Tax
on
|
Tax
at basic rate
|
Tax at higher rate |
| 2005/06 & 2006/07 | under 4 years | £500 | £110 | £200 |
| 4 years or over | £350 | £77 | £140 | |
| 2007/08 | all vans | £3,000 | £660 | £1,200 |
The amount payable 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 you receive free or subsidised fuel for private use, you will have a tax liability from 2007/08. In this case you will pay tax at your marginal rate on a benefit of £500. ( basic rate £110; higher rate £200 ).
For more detailed information on this subject you should visit www.hmrc.gov.uk/vans/index.htm
Here is a copy of a letter sent to all relevant clients in February 2007