Road tax, or Vehicle Excise Duty (VED), is quite straightforward in the UK for vans compared with cars – particularly since the laws around how road tax is calculated were changed last year.
The below guide will help you understand what the tax rules and rates are for vans over the current 2018/2019 tax year and find out more about van road tax, benefit-in-kind (BIK) and the different tax considerations business and personal use vans.
All of the information applies to standard vans that weigh no more than 3.5 tonnes.
How much is road tax for a van?
In contrast to cars, which are taxed depending on their CO2 emissions (the more they pollute, the more tax must be paid), tax for light commercial vehicles like vans and pickups is charged at a flat rate determined by how old the vehicle is.
2018/2019 van road tax cost: £250
Currently, the cost of van tax is £250 per year, or £137.50 if you only want to pay for six months.
This applies to all vans that were built after 1 March 2001 and come under the TC39 VED tax code. Road tax is charged at a different rate for vans that are compliant with Euro 4 and Euro 5 emissions regulations – which are charged a slightly cheaper flat rate.
If your van was built before 1 March 2001, then the cost of van road tax is calculated based on the engine size i.e. 1595cc or smaller, and 1595 and higher.
If you have a fully electric van then you currently do not have to pay any road tax.
Benefit-in-kind (BIK) rate for vans
Benefit-in-kind is the term for the tax you pay for any ‘benefits’ you receive from your employer that are on top of your salary, which includes using vehicles. For vans, the benefit-in-kind is set at a flat rate of £3,350 for 2018/2019.
This means that if you are at the 20% income tax level you will be charged £670 tax per year (just less than £56 per month), and £1,340 per year if you are in the higher 40% tax band (just under £112 per month).
The benefit-in-kind rate only kicks in if you use a work van for private use. If the work van is only ever used for business-related journeys then you do not have to pay benefit-in-kind tax.
What’s the difference between business and private use of a van?
Sometimes there can be a grey area regarding whether your use of a work van is strictly business or constitutes personal use.
According to HMRC, a business journey is defined as one that is “made as part of work (e.g. a service engineer travelling between appointments)” or a trip to a “temporary workplace”.
HMRC allow for what they call “insignificant” private journeys within these rules, for example making a detour to buy a coffee on the way to work, or driving home in a work van if you need it first thing the next morning.
Van fuel is also a consideration if you use a work for personal reasons and your employer pays for the fuel, as that is also deemed a benefit that is subject to tax. For the 2018/19 tax year, the Van Fuel Benefit Charge rate is set at £633 – so you’ll be taxed on either 20% or 40% of that amount depending on your tax band.
As you can imagine, there are a lot of grey areas when it comes to benefits-in-kind and whether a van is used for business or private purposes.
The important thing is to know about benefits-in-kind and that they may be applied, and to make sure you and your employer keep accurate records of when and how the van is used and whether fuel costs we reimbursed in order to avoid unnecessary tax charges.
Road tax for electric vans
As a way to encourage more zero-emissions vans on the roads, there is currently no road tax to pay if you drive 100% electric van.
The benefit-in-kind rate for electric vans is also a lot lower, as HMRC has stated that for the current tax year electric vans will incur benefit tax charges at 40% of the regular rate – which comes to £1,340.
It’s important to note that if you have an electric van you still need to apply for road tax in order to have your van classed as ‘taxed’ on the system. Otherwise, the DVLA will list your van as untaxed and you may incur a fine.