Most employers who provide employees with vans are aware of the changes in van and van fuel benefit. Ultimately, from April 2007 a £3,000 benefit charge and £500 fuel scale charge arises if an employee uses the van privately. (NB! In the case of company vans, home to work is not deemed to be private travel).

As always, during a PAYE & NIC Audit, it will be the employer’s responsibility to prove to the Revenue that the vans have not been used privately. Failure to do so will result in the employer being “invited” to settle the tax on a grossed-up basis, Class 1A NIC with interest and penalty addition.

The Revenue helpfully advises that, “….(employers) will need to keep sufficient records to show that private use is restricted to journeys between home and work. This may include making the conditions clear in employment contracts or asking employees to sign a statement acknowledging company policy on what use is allowed and any disciplinary consequences. Employers may also, for example, want to keep mileage or other records showing how the vehicles are used….”

If you do have any company van drivers, they should be made aware of the changes to the van taxation rules, and we would also recommend this is done in conjunction with your HR function.

This page was last updated on Friday, January 04, 2008.