Van tax explained
Benjamin Franklin is famously attributed with coining the phrase, “In this world nothing can be said to be certain, except death and taxes." While the former may not be associated with investing in a commercial vehicle, the latter most definitely is. Understanding van tax can often confound small business owners, so being aware of exactly why and how you need to tax your van is key, as is knowing the van tax cost associated with your vehicle.
So, what types of tax will your van be subject to? We take a look at the different variants that will affect you and your business.
The most obvious form of van tax you will pay is the Vehicle Excise Duty (VED). Just like on regular private vehicles, VED is an annual fee that must be paid for you to be legally entitled to drive your van on public roads. Until April 2017, the amount paid for a private car depended on the CO2 emissions of your vehicle; so, the more your car pollutes the environment, the higher the VED you will have to pay. Road tax on vans, however, is charged at a flat rate of £240 for 12 months, or £132 for six months. These rates - which are applicable for 2017/18 - apply to all vans built after 1 March 2001.
Slightly more complex are the issues of benefit-in-kind tax. This charge, which is levied against any benefits you receive from your employer including access to vehicles, is also set at a flat rate of £3,230. However, benefit-in-kind only applies if the commercial vehicle is being used for private journeys; should the vehicle be used solely for business purposes - i.e. travel to appointments or to a temporary workplace - the van will not be subject to this benefit-in-kind charge.
If you do use your work’s van for private journeys but the fuel is paid for by your employer, this will also be subject to tax. The current rate of the benefit value is £610 per year and as such, you’ll be taxed at a rate of either 20% or 40% (if in the higher tax band) of this amount.
There are further complexities relating the cost of van tax. For example, if you’re unable to use the van for more than 30 days in a row, those benefit-in-kind and fuel tax charges may no longer be applicable. As such, we always recommend working alongside experienced tax experts who will be able to offer the advice you need to ensure you’re not overpaying.
For more details on tax, or to explore a range of used vans ready to buy today, contact the experienced teams at Vanwise in Harlow and Maidstone. We’ll be happy to provide you with the impartial advice you need to buy the perfect used van.