Benefit charge on company vans available for private use (480: Chapter 14)
How to work out the benefit charge for company vans available for private use.
Overview
These rules only apply from 6 April 2005. For earlier years, see previous editions of 480 on the National Archives site.
14.1
Section 115
Chapter 11 deals with the circumstances in which a van benefit charge is incurred from 6 April 2005. This chapter deals with the calculation of the van benefit charge from the same date.
The amount of the charge
14.2
Section 155
The charge is nil if both the following requirements are satisfied throughout the year (or part of the year depending on when the van is available to the employee) the van must:
- only be available to the employee for business travel and commuting – must not in fact be used for any other private purpose except to an insignificant extent
- be available to the employee mainly for use for the employee’s business travel
14.3
Section 155(3)
If one of the requirements at paragraph 14.2 is not met, the charge for 2021 to 2022 is £3,500 (£3490 for 2020 to 2021).
14.4
If the van cannot in any circumstances emit CO2 by being driven, the charge for 2010 to 2015 inclusive was nil.
For tax years 2021 to 2022 onwards the charge for such vans is also nil.
From 2015 to 2016 if the van cannot emit CO2 by being driven and the tax year is any year between 2015 to 2016 and 2021 to 2022 the cash equivalent is the appropriate percentage of the van benefit charge for that tax year as follows:
- 20% for 2015 to 2016
- 20% for 2016 to 2017
- 20% for 2017 to 2018
- 40% for 2018 to 2019
- 60% for 2019 to 2020
- 80% for 2020 to 2021
Insignificant
14.5
Sections 114 (3A) and 155(3)
The word ‘insignificant’ means ‘too small or unimportant to be worth consideration’. Private use is to be considered insignificant if it’s:
- insignificant in quantity in the tax year as a whole (that’s a few days at most)
- insignificant in quality (for example, a week’s exclusive private use is clearly not insignificant)
- intermittent and irregular
- very much the exception in terms of the pattern of use of that van by that employee (or their family or household) in that tax year
14.6
Examples of insignificant use are an employee who (using the van):
- takes an old mattress or other rubbish to the tip once or twice a year
- regularly makes a slight detour to stop at a newsagent on the way to work
- calls at the dentist on the way home
14.7
Examples of use which is not insignificant are an employee who:
- uses the van to do the supermarket shopping each week
- takes the van away on a week’s holiday
- uses the van outside of work for social activities
14.8
If the van in which the private use takes place is shared (see ‘shared vans’ below), use is likely to be insignificant if it’s not just and reasonable to reduce the benefit of the other sharer on account of it (precisely because the use is ‘too small or unimportant to be worth consideration’).
Reductions in the charge
14.9
Section 156
The charge is reduced for the following reasons, and in this order when the van is:
- unavailable (paragraph 14.10)
- shared (paragraph 14.12)
- payments are made for private use of the van (paragraph 14.16)
Reduction because van unavailable
14.10
Section 156
When the van is unavailable for any part of the year, the benefit charge is reduced in proportion to the total number of days on which it’s unavailable.
14.11
A van is treated as unavailable to an employee on any day if the day falls:
- before the first day on which the van is available to the employee
- after the last day on which the van is available to the employee
- within a continuous period of 30 or more days throughout which the van is, in fact, not available to the employee at all
Shared vans
14.12
Section 157
The next adjustment to the amount of the charge is to take into account whether the van is shared. A shared van is one which is:
- available to more than one employee concurrently
- so made available by the same employer
- available concurrently for each employee’s private use
14.13
Section 157
To calculate the charge on each employee sharing a van:
- calculate the charge (as above) as though the van were not shared, and then
- reduce that charge on a ‘just and reasonable’ basis
14.14
There’s a special rule where 2 members of the same family or household, ‘E’ and ‘M’, share a van and E is in excluded employment (is not chargeable under the benefits code). In that case, E’s use of the van is disregarded when applying the ‘just and reasonable’ reduction to the charge on M.
14.15
In general, the total charge for the shared van should not exceed the cash equivalent of the van if only one employee had used it. The benefit received by each employee should be reduced on a just and reasonable basis.
Payments for private use
14.16
Section 158
The amount chargeable on each employee is reduced pound for pound by the amount which the employee needs to pay, and actually pays, for private use of the van. This adjustment is made after any reduction arising from shared use of the van.
From 2014 to 2015 onwards the wording of this section changed to make sure that any payment for private use must be paid within the relevant tax year before it can be deducted.
From the 2017 to 2018 tax year onwards private use payments made before the 6 July following the tax year when the benefit was provided will be accepted as reducing the cash equivalent as long as they meet the conditions described in this chapter.
Van temporarily replaced
14.17
Section 159
If a van is unavailable for fewer than 30 days and is replaced by another, there’s no additional charge for the replacement van. Instead, it’s treated as though it were the normal van for that period, meaning that the terms and conditions for the replacement are treated as though they applied to the normal van.
Record keeping
14.18
Employers will need to be able to substantiate the end of year returns they make on form P11D, including nil returns. Where they have registered to payroll benefits through Real Time Information (RTI), details about calculating the taxable amount should also be kept.
14.19
Where a benefit is declared or payrolled, the employer will need to identify:
- each van used by an employee
- the age of each van (up to and including 2006 to 2007)
- if a van is shared, by whom and in what proportions
- periods of 30 or more consecutive days when a van was incapable of use
- contributions required to be paid and actually paid by any employee having had private use of a van
14.20
Where a nil return is made, it will be necessary to demonstrate that the necessary conditions have been complied with in practice as well as in theory.
Useful information will include the terms and conditions on which the van is made available to the employee and mileage records showing actual use.
Optional remuneration arrangements
14.21
Section 154A
From 6 April 2017 where the van benefit is provided as part of optional remuneration arrangements the amount of the benefit treated as earnings from the employment is the greater of the:
- value of the benefit worked out under the normal rules (ignoring any private use payment)
- amount of any cash pay foregone
There’s more guidance about optional remuneration arrangements in Appendix 12.
Last updated 10 May 2021 + show all updates
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The van benefit charge at sections 14.3 and 14.4 has been updated.
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First published.