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Accountants in Medway - Sinden Thackeray Partnership

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Company Car or Van?

Newsletter issue - September 07.

The taxable benefit of using a company van for private journeys is now £3,000 per year, plus an extra £500 if fuel is provided. If you pay tax at the 40% rate, that amounts to an additional tax bill of £1,400. Compare that to the benefit of using a company car that cost say £22,000 with a CO2 emissions rating of 178gr/km. The total taxable benefit of car plus fuel would be £8008, which at the 40% rate is a tax charge of £3293.20 for 2007/08.

Most company vans are hardly suitable for using for family transport, but there are some very comfortable double-cab pick-ups that do count as vans for tax purposes. There are two criteria to meet:

  • The vehicle must be designed primarily to carry goods or other loads; and
  • It should be designed to take a payload of at least 1 tonne, but weigh no more than 3,500kgs, when fully laden. Anything heavier makes it a heavy goods vehicle which does not carry a benefit in kind charge for the driver.

The payload test can be tricky as a fibre-glass cover for the back will eat-into the payload amount. Check with the manufacturer or dealer about the payload for the particular model you are interested in, as a few kilos out will mean you pay tax of a percentage of the list price as a company car, rather than the flat rate benefit of £3000 as a van.

 


Christopher Kember FMAAT is licensed and regulated by AAT under licence number 7213. AAT is recognised by HM Treasury to supervise compliance with the Money Laundering Regulations and Sinden Thackeray Partnership is supervised by AAT in this respect.