Where an employee is provided with taxation of company vans that is available for private use, a tax charge may arise under the benefit in kind legislation. However, this will not always be the case. Unlike company cars, where a van benefit charge does arise, it does not depend on CO2 emissions. Instead, it is a set amount.
If fuel is provided for private use in the van, a fuel benefit charge may also arise.
Electric vans
The van benefit for a zero-emission van is nil, regardless of the level of private use. Consequently, allowing an employee to use an electric van for private use is a valuable tax-free benefit.
Restricted private use
Where an employee is provided with a van other than one with zero emissions, it is still possible to avoid a benefit in kind charge if private use is restricted. The restricted private use condition comprises two tests, both of which must be met:
- the commuter use requirement; and
- the business travel requirement.
Both must be satisfied throughout the tax year (or part of the tax year for which the van is provided).
The commuter use requirement is met if:
- the terms on which the van is made available to the employee prohibit private use other than for the purposes of home to work travel (known as ‘ordinary commuting’) or travel between two places which for practical purposes is substantially home to work travel; and
- neither the employee nor a member of their family or household makes private use of the van other than for these purposes.
However, as long as any other private use is insignificant, the commuter use requirement is treated as met. HMRC cite the following as examples of insignificant private use:
- taking an old mattress or other rubbish to the tip once or twice a year;
- making a slight detour on the way to work to drop a child at school or to stop at a newsagent; or
- calling at the dentist on the way home from work.
By contrast, the use of the van to do a weekly supermarket shop, on a holiday or outside work for social activities is not regarded as insignificant and if the van is used in this way, the restricted private use exemption will not apply.
The second limb of the restricted private use condition is the business travel requirement, which is that the main reason that the van is made available to the employee is because they need to undertake business travel in the van as part of their job.
Where the restricted private use condition is met, the benefit in kind charge is nil.
Unrestricted private use – the taxation of company vans
If the employee is able to use the van other than for ordinary commuting and the van is not an electric van, a tax charge arises under the benefit in kind legislation. For 2026/27, the taxable amount is £4,170 (up from £4,020 for 2025/26). Unrestricted private use of a company van (other than an electric van) will cost a basic rate taxpayer £834 in tax and a higher rate taxpayer £1,668 in tax in 2026/27.
Pooled vans
No tax charge arises on a pooled van. This is a van that is available and actually used by more than one employee, no one employee uses the van to the exclusion of the others and any private use of the van is merely incidental. In addition, the van must not normally be kept overnight at or near an employee’s home.
Additional fuel charge
Where fuel is provided for unrestricted private travel in a van which is not an electric van, a separate fuel benefit charge arises. This is set at £798 for 2026/27 (up from £769 in 2025/26). A basic rate taxpayer will pay £159.60 in tax in 2026/27, and a higher rate taxpayer will pay £319.20 – this is likely to be less than cost of the fuel used for private use and can be a worthwhile benefit.
