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HMRC internal manual

Employment Income Manual

Van benefit to 2004/05: exceptions

Sections 118(1) and 168 ITEPA 2003

There are two exceptions to the van benefit charge rule at EIM22060. They are:

  • vans forming part of a “van pool”, which are exempted from charge, Section 168. They are considered in detail at EIM23450 onwards.
  • a van that the employee is specifically prohibited from using for private purposes and that is not so used, Section 118(1).

Private use prohibited and no actual private use in practice

The mere prohibition of private use is insufficient to prevent a tax charge. It is also necessary to show that a van is not used for private motoring.

Thus if a provided van is in fact used privately there will be liability even if private use is prohibited.

Conversely liability will still arise even if no private use is made of a provided van unless, in addition, either:

  • private use has been specifically prohibited, or
  • the van is a “shared” van (see EIM22070).

Refer to EIM23300 if a director or an employee (except those in lower paid employment, see EIM20007) quotes Gilbert v Hemsley (55TC419) in support of a claim that:

  • the use of a provided van for private motoring is forbidden and
  • no such use is made of it.

Years from 2005/06 onwards

Full guidance on van benefit for these years can be found using the contents page at EIM22700.