Company Van & Fuel Benefit
When the private use of a company van with a weight less than 3.5tonnes is provided to an employee the annual taxable benefit is a fixed amount.
The fixed amount is £3,490 for 2020/2021 tax year
Similarly, if free fuel is provided for private motoring in the van then a fixed taxable benefit of £666 applies for 2020/2021 tax year
The only exception to the private use benefit is if a site-based driver is required to take a van home each night in order to travel straight to a job site the next morning.
Private Use Contributions
If a company van driver is required to make a financial contribution as a condition of the van being available for private motoring, the contribution will normally reduce the annual taxable benefit of the van.
Each £1 paid during the tax year as a private use contribution reduces the annual taxable benefit by £1.
For example, let’s assume a driver pays £50 per month as a private use contribution (i.e. £600pa).
The £3,230pa benefit is then reduced for the £600pa private use contribution, which makes the annual company van benefit £2,630pa.
The maximum tax-deductible private use contribution in any tax year is equal to the taxable benefit of the company van.
A negative taxable benefit (and therefore a tax refund) cannot be created by making a private use contribution greater than the annual benefit of the van.
Unlike company cars, if a company van driver makes a capital contribution towards the price of the van this has no effect on the van benefit.
Zero Emissions Vans
If a company van driver has the private use of a van with zero CO2 emissions then the taxable benefit is reduced to 60% of the normal fixed annual benefit (2019/20 tax year).
This percentage will be changed each tax year until 2022/23, so the annual benefit will be as follows:
||60% of standard annual van benefit
||80% of standard annual van benefit
||90% of standard annual van benefit
||100% of standard annual van benefit
The effect of the increase is that, by 2022/23 tax year, a driver with private use of a zero emissions van will pay tax on the full van benefit.