HMRC has confirmed that new tax charges for company car and van drivers are now in force. Drivers must report a standard value of £4,170 to HM Revenue and Customs as part of the Benefit-in-Kind (BiK) tax.
How the Charge Works
The £4,170 standard value can be reduced under certain circumstances. These include when an employee cannot use the van for 30 consecutive days, when the employee pays the employer for private use, or when the van is shared by multiple employees. In the case of shared vans, the £4,170 value is divided by the number of employees.
Understanding Benefit-in-Kind Tax
The RAC explains that if your employer provides a company car, you pay BiK tax on personal use, including commuting. The tax is calculated based on the car's CO2 emissions, its P11D value, and your income tax band. This ensures the personal benefit of a company car is taxed like part of your salary.
Van Fuel Charges
For van fuel used for private journeys, a standard value of £798 must be reported to HMRC. This can be reduced if the employee cannot use the van for 30 consecutive days, if the employee reimburses all private fuel costs, or if the employer stops providing fuel during the tax year.
Zero Emission Vans
For zero emission vans, the reportable value on the P11D is 0% of £4,170, which amounts to £0. Most payroll software packages automatically calculate these reductions.
