A Fleet Manager’s guide to vehicle tax bands: vans
Understanding VED bands can be quite challenging
In order to keep on top of things when taxing your fleet vehicles, here’s what you should be considering.
It’s true — vehicle tax bands are far from straightforward. How much you pay across your fleet will depend on a variety of factors including the type of vehicle, the size of its engine, and even the fuel it uses. These elements – and more – are essential when it comes to calculating Vehicle Excise Duty (VED).
Vans registered after 1st March, 2001
This section will help you understand the current rules and rates for vans, including information about road tax (VED), benefit in kind (BIK) and the difference between business and private use.
The details below apply to all light goods vehicles with a maximum Gross Vehicle Weight (GVW) of under 3,500kg.
What are the road tax rates for vans?
Instead of varying VED based on emissions figures, as it does for cars, VED for vans uses just a handful of standard rates. This means that for 2018/2019, the van road tax rate in a single 12-month payment is £250.
You can pay VED on all vans in a 6-monthly payment instead, though these tend to cost a touch more (£137.50 at the standard rate). You can also pay in monthly instalments, but this costs a touch more again.
The logbook/vehicle registration document (V5C) should contain details of your van’s Euro emission standard, usually in section D.2. This is important as, if your van conforms to Euro 4 or Euro 5 emissions standards and was registered between specified dates, it’ll receive a discounted VED rate.
If the van is Euro 4 compliant and was registered between 1st March, 2003 and 31st December, 2006, then it’s classed as a ‘Euro 4 light goods vehicle’. Vans that are Euro 5 complaint and were registered between 1st January, 2009 to 31st December, 2010 are classed ‘Euro 5 light goods vehicles’. Both these classes pay a reduced, single 12-month payment of £140, or a 6-month payment of £77.
Regardless of what it conforms to and when it was registered, all electric vans are exempt from VED.
What is the benefit in kind (BIK) rate for vans?
BIK is the taxation levied against any perks you receive from your employer in addition to your salary – including access to vehicles for private use. As an employer providing company vans and fuel to your employees for both business and private use, you have certain National Insurance and reporting obligations.
BIK is set at a flat rate for vans and in 2018/19 the amount will be £3,350. This is then divided at the employee’s income tax level. This figure is reduced if:
· Your employee can’t use the van for more than 30 days in a row
· Your employee reimburses you for fuel when privately using the van
· The van is electric – in this case the BIK value will start at £1,340 for 2018/19, then be divided accordingly
· Other employees privately use the van (in which case you need to divide £3,350 by the number of employees)
At the end of the tax year you will be required to submit a P11D form to HM Revenue & Customs (HMRC) for each employee you’ve provided with expenses or benefits.
What defines business or private use of a van?
According to HMRC, you won’t have to pay any tax on a van if it’s only used for business journeys or if it’s used as a pool van between multiple employees. A business journey is a trip which is ‘made as part of work’ (e.g. a service engineer travelling between appointments), or to a ‘temporary workplace’.
A pool van is a van that’s available for use by multiple employees, providing it is necessary for their job and not kept near an employee’s residence.
You won’t need to report a van if it’s:
· Available for use and used by more than one employee.
· Available to each employee because they need it to do their job.
· Not normally kept at or near employees’ homes.
· Used only for business journeys (limited private use is allowed, but only if it’s incidental to a business journey, for example driving home to allow an early start the next morning).
If you use a work van for private journeys and your employer pays for the fuel, you are also subject to tax on that benefit. The 2018/2019 Van Fuel Benefit Charge rate is £633 a year (up from £610) and again, depends on your income tax bracket. Employees can avoid paying this if they reimburse the company for any private fuel used.
Let Allstar save you time and money
VED is just one of the many charges you’ll have to handle over the course of a fiscal year as a fleet manager.
However, with an Allstar fuel card, you can access fuel across the UK using low-priced and easily-located stations. Allstar has the largest fuel network in the UK, including exclusively-negotiated discounts across fuel. You’ll also be able to manage how much you spend, with full visibility and control over your drivers’ fuel costs. For further visability and control over your driver’s journeys, you can also look into our Business Mileage Monitor tools to help you separate their personal and business mileage, and submit it for VAT purposes.
To discuss which of our fuel cards can help you, contact us today.