Private use of company van

[altis]

The new tax year is looming fast and Mrs A, amongst many others, is getting a new tax code.

She has a Renault Clio van provided by work. It is necessary for her job and she does about 32,000 miles a year in it for them. As a perk, she is also able to use the van privately, provided she buys her own diesel, and this amounts to some 8,000 miles per year.

Up until now, the tax man has deemed her annual benefit to be £500 until the van is four years old, when it drops to £350. Unlike a car, this is a flat rate and does not depend on its value or the emissions. Her tax code is adjusted accordingly.

From 5th April the benefit is deemed to be a flat £3,000 per annum regardless of age or the actual cost of running the vehicle. Given the small proportion that she uses it, this is like saying it costs £15,000 a year to run the vehicle. For that kind of money they could tax and insure it but they'd never need to service it 'cos they could scrap it every 6 months and buy a new one.

She has enquired from her tax office whether she can pay a fair portion of the running costs. But no, her benefit is deemed to be £3,000 so that is what she'd have to pay to reduce the tax effect to zero.

There wouldn't be any tax to pay if her employer made it unavailable for use for at least 30 contiguous days but, for some reason, they won't play ball. They say that it is always available for private use even if she should choose not to use it.

She could ask for a car next but that isn't likely to happen for another 120,000 miles or so when the van is finally too expensive to repair.

There must be tens if not hundreds of thousands of people in this situation. Any ideas?

[homealone]

Have to say I'm tempted to suggest she gets a small car & leaves the van at work, when not used for work, if that is possible?

- like you say, altis, this must affect lots of people:disturbd:

[altis]

Her office is in Southampton and she works from home here in Warrington so, sadly, leaving it at 'work' is not an option.

[homealone]

Her office is in Southampton and she works from home here in Warrington so, sadly, leaving it at 'work' is not an option.

bum - I'm assuming that because the company assert the van is available for private use 'at all times', that Mrs A 'automatically qualifies' for the benefit in kind. If she can't leave it at work, it is difficult to 'prove' that she only uses it for work, bum again, sorry, altis, I'm not being much help :(

[MovedGoalPosts]

The only way round this is to change over to a vehicle allowance so the employee provides, taxes, insures maintains the vehicle with the company paying an allowance as part of salary towards this cost, and (within more limits) some sort of mileage rate.

Whatever, Mr Brown needs his pound of flesh and his environmental taxes sound good until you realise you don't have a choice but to be leeched dry by the system just to be able to do the job that enables you to pay the taxes.

[Nedkelly]

I also get use of my van and the company has said you can sign a form so you do not have to pay this.But by doing this you can not use the van for private use .If you want to you have to pay 22% of £3000 about 660 a year to use the van about £40 is pounds a month:mad: .The reason for this is a lot of companies have been buying these pick up trucks with 4 seats in them and all the company pay is the same as a van £500 .S the goverment could not make anew devision for these Mr Brown has raised the tax for a company van drivers.Speaking to a transport manager he said it bad news for the company van driver as most companies this is a perk of the job and by removing this the job becomes less atractive:mad:

[Vlad_Dracul]

The new tax year is looming fast and Mrs A, amongst many others, is getting a new tax code.

She has a Renault Clio van provided by work. It is necessary for her job and she does about 32,000 miles a year in it for them. As a perk, she is also able to use the van privately, provided she buys her own diesel, and this amounts to some 8,000 miles per year.

Up until now, the tax man has deemed her annual benefit to be £500 until the van is four years old, when it drops to £350. Unlike a car, this is a flat rate and does not depend on its value or the emissions. Her tax code is adjusted accordingly.

From 5th April the benefit is deemed to be a flat £3,000 per annum regardless of age or the actual cost of running the vehicle. Given the small proportion that she uses it, this is like saying it costs £15,000 a year to run the vehicle. For that kind of money they could tax and insure it but they'd never need to service it 'cos they could scrap it every 6 months and buy a new one.

She has enquired from her tax office whether she can pay a fair portion of the running costs. But no, her benefit is deemed to be £3,000 so that is what she'd have to pay to reduce the tax effect to zero.

There wouldn't be any tax to pay if her employer made it unavailable for use for at least 30 contiguous days but, for some reason, they won't play ball. They say that it is always available for private use even if she should choose not to use it.

She could ask for a car next but that isn't likely to happen for another 120,000 miles or so when the van is finally too expensive to repair.

There must be tens if not hundreds of thousands of people in this situation. Any ideas?
If that is the case then she needs to discontinue her use of the vehicle because if she continues to use it and does it legitimately(i.e tells the tax man) then it is not an economically sound situation,albeit convenient. I assume that her employer is dobbing her in to the taxman with regard to her prviate useage? How else would anyone know?

A friend of mine was in a similar situation. He worked in a shop and would sometimes use the shop van to travel to/from work. Bear in mind that on his way home,it might work late/visit a customers premises to do a job or drop stuff off. It was ok for a year or so then his emplyer started to try and deduct/cgarge for private useage. He told them to keep the van at the shop and he bought himself a small/economical car.
I have a similar situation. I have a company van which i keep at home. My situation is that i work from home and as soon as i start work from home i am effectively at work so there is no travelling to my place of work.

The homeward journet is slightly different and edepends on my work pattern for that period. I need a van at home to be "on call" at certain times. If i travel home and am then on call for the night then that homeward journey would not be taxable. If i am just finishing for the day,it would. I think my company had a big dispute with HMRC about this a fair few years ago and i dont know the outcome. All i know is that i dont pay any tax for having that van outside. If i did,then i wouldnt have it there.

Your partner needs to return the van and get public transport or a small runabout. Many small cars now have good performance and amazing fuel economy.

[Xaccers]

Thing is dooper, it sounds like the company are unwilling to inform the tax man that the van is no longer available for personal use, so if she just stops using it, she'll still pay the tax.

[AndyCambs]

It's not quite the employer "dobbing her into the taxman" as you put it. There is a legal requirement for taxation returns to be completed, and the van needs to be declared on the P11D form annually.

The exceptions are:

Pooled cars (regularly used by several employees)
Vehicles adapted for disabled drivers.http://www.hmrc.gov.uk/guidance/480-chapter-14.pdf
Section 14.2 says however that the charge will be nil if both the following requirements are satisfied:

The van must only be available to the employee for business travel and commuting, it must not be used for any other private purpose except to an insignificant extent and
the van must be available primarily for use for the employee's business.It might be worth asking your local Citizen's Advice Bureau, and/or asking your employer to stipulate in writing that the van is not available for private use (which, according to my understanding, would negate the tax liability).

[Vlad_Dracul]

point taken Xaccers and it seems that Andy Cambs has the solution in that this lady needs to get her van set up for business and commuting to/from work only as stated in the quote from HMRC. I can;t see why her employer is apprently being obstructive in this respect.

Things are bad enough with an effective tax rate of 39% on earnings without piling more tax on us.

Perhaps people are just to honest?

[jamiefrost]

A company car could possible cost more,

The only way round this would be as suggested before is to get a private car.

Is she based from home or the office?, if she is based from home then travelling to and from the office would be classed as business miles not personal.

The comapny has to report on the P11D details of the van, can't remember if this does stipulate the availability for private use. As Andy suggested maybe you can inform the taxman that the van is not available for private use.

JJ

[Xaccers]

point taken Xaccers and it seems that Andy Cambs has the solution in that this lady needs to get her van set up for business and commuting to/from work only as stated in the quote from HMRC. I can;t see why her employer is apprently being obstructive in this respect.

Things are bad enough with an effective tax rate of 39% on earnings without piling more tax on us.

Perhaps people are just to honest?

It's a pita isn't it?
It's crazy that you can be penalised for something you don't use because your company sucks, as the tax payer, you should be able to inform the tax man that vehicles aren't used for private purposes rather than having to rely on your company doing it.

[AndyCambs]

Unfortunately it's another example of the being bled dry by the HRMC.
Remember that 2p in the pound has been lopped off income tax - they have to make that up from somewhere!!

[Xaccers]

Unfortunately it's another example of the being bled dry by the HRMC.
Remember that 2p in the pound has been lopped off income tax - they have to make that up from somewhere!!

Looks like they've decided to put the tax burden all on Mrs A!

[bonzoe]

Company car drivers have been deemed to have a "benefit" far outwaying the cost of owning a car for some years. I hardly used my company car for private use but had to pay the deemed "benefit". When my employer allowed it, decided to run my own car and claim back the business use, saved lots, tax code went from negative K code to standard allownce and got a tax refund at the end of the year.

I'm surprised that the tax man has waited all this time to go after van drivers.

Just a pity that employers won't play ball with employees.

[richie]

It's a pita isn't it?
It's crazy that you can be penalised for something you don't use because your company sucks, as the tax payer, you should be able to inform the tax man that vehicles aren't used for private purposes rather than having to rely on your company doing it.

Mrs A can inform the tax man herself that the van is for travel to and from work only and not use it for Private journeys. I've just done the reverse as £60 per month is cheaper than me getting another car.

[altis]

I think that the assumption is that you will use it if it is available. The employer needs to be able to demonstrate that it was incapable of being used for a period of 30 consecutive days.

Horse's mouth:
http://www.hmrc.gov.uk/vans/index.htm
...and follow links for employee and employer to see the different aspects.

Some interesting background:
http://www.fnn.co.uk/news/view_article.asp?s=view_article&art_ID=39893

It appears that the IR wanted to base it on CO2 but were stymied because the manufacturers don't have to provide emission data for vans (like they don't provide fuel economy figures either).

It looks like she is going to have to pay up after all. It works out like an annual salary decrease of very nearly £750. Although, I suspect that, in future, all servicing etc will be done in works time instead of her own.