REV BN 42: Employer Provided Vans

Who is likely to be affected?

1. Employees provided with a van that is available for their private use and employers who bear Class 1A National Insurance on the taxable benefit of a provided van. Self-employed van drivers are not affected by these new rules.

General description of the measure

2. Following consultation, new rules are being introduced to determine the amount of the taxable benefit that arises where an employee is provided with a van by his or her employer and the van is available for private use.

Operative date

3. 6 April 2005

Current law and proposed revisions

4. Under the current rules, the benefit charge that arises where a van is available to an employee for private use is £500 (or £350 for a van that is 4 or more years old at the end of the tax year) and has been in place and unchanged since 1993. The charge also includes any private fuel provided.

5. A major deregulation of the company van rules has been announced today. Scale charges based on the type of private use will be introduced with a new charge for employer provided fuel.

6. From 6 April 2005 a nil charge will apply to employees who have to take their van home and are not allowed other private use. Where private use is unrestricted the existing £500 or £350 scale charge will apply dependent upon the age of the van. From 6 April 2007 the discount for older vans will be removed and the scale charge for unrestricted private use will increase to £3000 and if an employer provides fuel for unrestricted private use an additional fuel charge of £500 will also apply.

Further advice

7. If you have any questions about this change, please contact your local Inland Revenue tax office.