Taxing the benefits of cars and vans

Cars for business-use only – used solely for journeys forming part of an employee’s employment (e.g. between a service engineer’s appointments) or to a temporary workplace – which have no private use at all (e.g. driving to and from work) attract no reporting requirements, tax or NICs.

Employees earning less than £8,500 a year also have no reporting requirements, and there are no reporting requirements on ‘pool’ cars that are used by more than one employee for business purposes, and normally kept on the employer’s premises.

Employees or directors earning over £8,500 a year provided with a car for private use must report it to HMRC – see www.hmrc.gov.uk/tell- hmrc-company-car.

Fuel for private use

If an employee earns more than £8,500 a year or they are a director they need to report this use to HMRC on form P11D and play Class 1A NICs on the value of the fuel benefit – see www.gov.uk.

Vans

A van is defined as a goods vehicle with a maximum loaded weight of 3,500 kilograms. If there is no private use, there is no tax or NIC liability. Employees provided with a van to take home have to pay tax and NICs on assumed private use. Employers also have to pay Class 1A NICs. However, there is no tax or NIC charge if the van is only used for business travel and commuting and any other private use is ‘insignificant’.

Full details of car, van and fuel benefit taxation systems are available at www.hmrc.gov.uk.