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Introduction to this document

Company van agreement

Unlike company cars, you can provide your employees with a company van for business use which includes commuting to and from the workplace. To ensure no benefit arises, any private use must be insignificant.

Vans

If your company has the kind of trade that requires you and your employees to attend customers with tools and equipment, it is likely that you will have vans owned by the company that are used for these purposes.

HMRC’s online guidance implies that if the van is used for commuting to and from work then a taxable benefit arises; however this is incorrect - no benefit arises provided the restricted private use condition is met.

 Restriced private use

The condition is that the employer only permits an employee to drive the van for business purposes. However, unlike the position for company cars, ordinary commuting (travel between home and a normal place of work) counts as a business journey for the purpose of the van benefit.

So provided you prohibit your employee from using the van outside of business journeys and commuting there won’t be a tax charge.

 Maximum permitted usage

HMRC may look into the usage to try to argue that there is a benefit to tax. Therefore, we strongly recommend implementing our Company Van Agreement which expressly prohibits significant private usage. HMRC cannot then argue that you haven’t made your employees aware of the restriction on use, and would need to find evidence of significant private use to raise an assessment.

The legislation doesn’t give any hints regarding what “insignificant” is. HMRC’s view is that it would not be for more than a few days at most over the whole tax year, and not for a number of consecutive days. Essentially, it would be the exception in terms of the pattern of use.