Company Van Tax (BIK) Explained
What is company van tax?
Van benefit-in-kind (BIK) tax, commonly referred to as Company Van Tax or Van Benefit Charge, is the taxation amount applied to an employee of a company for their use or access to a vehicle for non-business purposes.
When do I need to pay BIK on a van lease?
Here's your quick guide to know when you are required to pay company van tax:
- You are liable for this taxation when you use a company van for non-business purposes, i.e. for your own personal journey or use.
- If you need to work out how much van tax you are required to pay, you can use an online company car tax calculator.
- If you are a business owner or employer you will be required to pay Class 1A NIC and P11D reporting when any lease van is taken by an employee for private use.
Is Van BIK the same as Car BIK?
The rules are generally the same, however there are some differences to be aware of:
- For vans HMRC don't count the commute to and from work as as BIK for vans, like they do for cars. This means if you only use the van for business purposes and your commute to work you won't be liable for a van benefit charge.
- However, with Pick-ups and similar vehicles you will incur a charge if the intention is to use for both private mileage and business purposes.
- We therefore recommend that you always a keep a log of private miles driven. This will provide a safe-guard should the need be required.
What about self-employed van drivers?
The rules are different for self-employed van drivers, and no BIK or van benefit charge will apply.
Please refer to the HMRC's website for a full breakdown of the rules on company van taxation.