Company van tax: when is a van a benefit in kind?

The good news is the rules are more forgiving than the equivalent for company cars, but they still can catch people out. Here is how it works for 2026/27.

What you need to know

A van becomes a taxable benefit the moment it is made available to an employee (or a member of their household) and used for private journeys. When that happens, there is a fixed van benefit charge to pay. For 2026/27 that charge is £4,170. It is a flat figure, regardless of whatever the van cost, so a basic rate taxpayer pays £834 a year in tax on it and a higher rate taxpayer pays £1,668. Where private fuel is also provided, a separate van fuel benefit charge applies on top.

A quick example is: say you give a member of staff a van and let them use it at weekends. That private use makes it a benefit in kind, so there is the £4,170 charge to account for and £834 a year in tax for a basic rate taxpayer. Restrict the van to work and commuting only, put that in writing and crucially, stick to it and that charge can disappear altogether.

When there is no charge to pay

You can avoid the benefit in kind charge if private use is properly restricted. Two conditions both have to be met throughout the year: the terms of use have to prohibit private journeys other than ordinary commuting, meaning home to work travel and neither the employee nor their household can actually make other private use of the van.

A limited amount of private use is allowed. HMRC gives examples such as taking rubbish to the tip once or twice a year, or a slight detour for a newspaper on the way to work. Regular personal journeys though, are not.

Pooled vans and electric vans

There is also no charge on a pooled van. That is a van used by more than one employee, not kept by any one of them, only used privately in an incidental way, and not normally kept overnight at or near an employee's home. And a fully electric, zero-emission van currently carries a van benefit charge of zero, so there is no benefit in kind to pay on the vehicle itself.

What this means

If your team only uses the van for work and commuting, you can often keep it out of benefit in kind territory altogether, as long as the rules are followed and you can show it. If there is genuine private use, budget for the £4,170 charge. When in doubt, check your own position, since the figures are reviewed every year.

This is general information, and not to be taken as tax advice. Confirm your own position with a qualified tax accountant.