Vans and Pickups - When are they not a taxable benefit?

As an employer, you may currently provide, or be looking at providing your employee/s with company vans.

Whilst the rate of BIK for cars varies depending on the vehicle that the employee is provided with, all vans are taxable at the same rate – regardless of their size, emissions or price. The only exception to this is fully electric vans, which have a 0% BIK value. For the 2024/25 tax year, the van BIK is set at £3,960 meaning that a 20% taxpayer would pay £792 per annum in van BIK.

An important point to note is that when the van is only used for business journeys and there is nil or ‘insignificant’ private use, there is no BIK chargeable on the employee. HMRC accepts that for company vans, commuting to and from work is regarded as business use. ‘Insignificant’ private use is not defined, however, HMRC’s view is that this needs to be ‘too small or unimportant to be worth consideration’.

HMRC’s manuals give some examples of use that they would deem to be insignificant:
An employee who:

• takes an old mattress or other rubbish to the tip once or twice a year
• regularly makes a slight detour to drop off a child at school or stops at a newsagent on the way to work
• calls at the dentist on the way home.

Where an employee is using the van for personal use as well as business journeys, they will be taxed on this accordingly. It is also often the case that it would be very beneficial for the employee to have their private fuel paid for when using a company van. The employee would have an additional BIK charge of £757 on the van fuel benefit, however, this would equate to additional tax for a 20% taxpayer of only £151 per annum. Significantly less than the cost of paying for the fuel is likely to be.

The age-old questions then arise - is a double cab pickup a car or a van? What happens if you add an additional row of seats in the back of a commercial van? Does this mean that it is a car or a van for Benefit-in-Kind purposes?

For double cab pickups, this is reasonably straightforward as HMRC has accepted that as long as the pickup has a payload of 1 tonne or more (1,000 kg), then this is accepted as a van for BIK purposes. You should be careful however if the pickup has a hardtop roof/canopy. The payload limit for these vehicles increases slightly to 1,045kg

For vans with additional rows of seats, however, it is not quite so straightforward. For more information in relation to this, please click here - https://www.oldfieldadvisory.com/articles/2020/01/203-when-is-a-van-not-a-van 

For more information on how we could help you and your business, please contact us at info@oldfieldadvisory.com or call 02476673160 and we will be happy to help.

Please note: This article is provided for information only and was correct as at time of writing (13/06/24). Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance.  No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.