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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Van benefit from 2005/06: definitions - insignificant private use

Section 114(3A) ITEPA 2003

The guidance on this page only applies to vans from 2005/06; it has no relevance whatsoever to car benefit (EIM23000 onwards) or to van benefit for years up to and including 2004/05 (EIM22050 onwards).

Insignificant private use

Even though a van is available for private use, it remains outside the van benefit charge for a tax year if private use of the van during the tax year by the employee or member of his family or household (EIM20504) is insignificant (including nil for this purpose).

If a van is exempt from the van benefit charge for this reason, Section 202 ITEPA 2003 also exempts it from the residual benefits legislation in Part 3 Chapter 10.

Meaning of insignificant private use

The word ‘insignificant’ is not defined, so it takes its normal English meaning. For example, the New Oxford English Dictionary defines it as, “too small or unimportant to be worth consideration”.

Private use is to be considered insignificant if it is:

  • insignificant in quantity in the tax year as a whole (i.e. a few days at most)
  • insignificant in quality (e.g. 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
  • insignificant in absolute terms, not merely as a proportion of other use.

If the van in which the private use takes place is shared, use is likely to be insignificant if it is not just and reasonable (EIM22830) to reduce the benefit of the other sharer on account of it (precisely because it is “too small or unimportant to be worth consideration”).

Insignificant private use elsewhere in the vans legislation

The term insignificant is also used in relation to the restricted private use condition (EIM22795). It carries the same meaning there.

Examples

There are some examples at EIM22880. They are intended to be sufficient to illustrate the principles involved and HMRC staff should not comment on other possibilities.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)