The tax treatment of company cars is significantly different from company vans. From an income tax perspective, company cars are subject to relatively high charges based on the list price (rather than actual value) and CO2 rating of the vehicle, and company car fuel remains an ‘all or nothing’ benefit, which is becoming more punitive (i.e. tax-ineffective) with each passing year. Vans or ‘commercial vehicles’ on the other hand have, generally more lenient, fixed rate taxable benefits applied. These can even be reduced to NIL if the only private use is incidental or incurred on ‘ordinary commuting’. In addition the employer may be able to secure a VAT input tax deduction on the purchase in appropriate cases, significantly reducing the overall net vehicle cost.
Whilst this may encourage both employee and employer toward the ‘van’ rather than the ‘car’ route, it can be difficult to tell the difference between the two types of vehicles. Please click on this link to obtain our free technical update news item on this topic.
If you require additional information please contact the ET4B team.