Have you provided a company van for your employees who are still able to work during the pandemic?

An employee may be provided with a company van to enable them to do their job. Where that van is also available for the employee’s private use, a tax charge arises under the benefit in kind legislation. However, if private use is limited to home-to-work travel, the van can be provided tax-free.

If the employer also pays for petrol for private journeys in a company van, a separate van fuel scale charge arises.

Business use only

If the van is only used for business journeys, there is no tax to pay and no employer’s Class 1A National Insurance.

This would be the case if, say, an employee drove to the employer’s premises in his or her own vehicle, picked up the van and drove the van for work purposes, returning it to the employer’s premises at the end of the day.

Journeys to a temporary workplace also count as business journeys and where this is the case, the employee can start the van journey from home.

Unrestricted private use

Private use is use of the van other than business use. When the employee has unrestricted private use of a van, a tax charge arises. The amount that is charged to tax is £3,490 for 2020/21 and £3,430 for 2019/20 where the van is not an electric van.

Consequently, a higher rate taxpayer will pay £1,396 in tax for 2020/21 and a basic rate taxpayer will pay £698.

The employer also pays Class 1A National Insurance on the van and fuel charge.

Restricted private use

There is no tax charge if the restricted private use condition is met. There are two tests that must be satisfied for this to be the case – the commuter use requirement and the business travel requirement.

The commuter use requirement stipulates that the terms on which the van is made available to the employee prohibit private use other than for home to work travel and the van is not used otherwise for private travel. Insignificant private use, such as stopping to buy a newspaper on the way to work, is ignored in determining whether this condition is met.

The business travel requirement stipulates that the van is mainly available to the employee for the purposes of the employee’s business travel.

Where the restricted private use condition is met, there is no tax to pay, and also no fuel benefit if the employer pays the cost of the fuel for home to work travel.

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If you would like to get more detailed advice specified to you company situation you can contact us by dialling 0208 523 0311 or sending email at info@ybsuk.co.uk.