Understanding Company Van Tax

Date: 3rd June 2025

Company van tax otherwise known as (Benefit-in-kind- BIK) applies to vans being used for personal use. According to HM Revenues and Customs (HRMC) if an employee uses the van for a business journey which includes delivering goods or visiting clients and for commuting to work, then there will be no tax to pay. Vans being used insignificantly for private use (one-off trips) will also be exempt from the BIK tax.

When Will You Need to Pay the Company Van Tax?

If the van is being used for significant private use, then you will need to declare this and you will need to pay the BIK company van tax. It is your company’s legal duty to tell the tax authority of this.

To ensure that you don’t incur any extra costs, your company must keep the mileage records to detail your journeys to prove whether you are using them for private or work. It is important to note that drivers of a van who are self-employed or working as a sole trader will not need to pay BIK tax on their vehicle.

What is Classed as a Van for HMRC Purposes?

So, what is classed as a van by HMRC? This is an exact definition by HMRC: “A vehicle constructed primarily for the conveyance of goods or burden, whose design weight does not exceed 3,500kg.”

How is Company Van Tax Calculated?

Compared to company cars, where the tax paid by the drivers can vary based on a number of factors which include: the price of the vehicle, the fuel type and the CO2 emissions, the BIK tax rates are a bit simpler for company van drivers in that there is flat rate cost from the HMRC.

Vehicles used for private journeys

The standard value of £3,690 to HMRC, this price can be reduced for the following:

Your employee cannot use the van for 30 days in a row

Your employee pays for the van privately

If other employees are using the van. The tax can then be divided by the number of employees.

The standard value for company fuel tax has a standard value of £715 to HMRC. This can then be reduced due to the following:

The employee cannot use the van for 30 days in a row

The employee pays privately to use the van

If the company stopped providing fuel during the tax year

For the 2025/26 and 2026/27 tax years, the standard value will increase to £4,020 for company van tax and £769 for the fuel benefit charge.

To work out the company van tax, you will need to look at your personal income tax band. During the 2023/34 tax year, if your personal income tax rate is at 20%, then you will need to pay 20% of the BIK rate. There will be an additional £143 per year if there is any fuel benefit charge applied. If you have a personal income tax rate of 40%, then you will need to pay 40% of the BIK rate as well as an additional charge of £286 for fuel benefits.

Double Cab Pick-ups

Just to note that double-cab pick-ups were classed as vans before April 6th 2026, but due to the tax change, these vehicles are now classed as cars for the benefit-in-kind tax. This means that any tax charges will be specific to the vehicle’s listed price, fuel type and CO2 emissions.