Whether you use a van to make deliveries, move equipment, or as your own mobile workshop, your vehicle is a key part of your business.
One of the questions we hear a lot is: Can a work van be used for personal use? And if so, what do I need to know about in terms of insurance, tax and other regulations?
In this article, we’ll explore these questions in detail, and give you the information you need to run your business effectively.
Can a work van be used for personal reasons?
As long as your van insurance covers you for personal driving (known as social, domestic and pleasure insurance) then yes, your work van can be used for personal journeys.
However, this comes with certain conditions and potential tax implications. Generally, if an employer provides a van to an employee and it's used for personal journeys, a 'benefit-in-kind' (BIK) tax charge can apply. That’s because the use of a work van for private use is seen as a benefit on top of your salary, so you’ll need to pay tax on that benefit.
The amount you’ll need to pay depends on various things, including how often you use the van for personal journeys and the type of van.
Insuring your work van
When using a work van for personal driving, it's essential to make sure that the work van is properly insured. Typically, there are three main types of van insurance:
1. Carriage of Own Goods: Covers the transportation of your own tools or equipment, also known as business van insurance.
2. Carriage of Goods for Hire or Reward: This covers delivery drivers who transport other people's goods in exchange for payment, also known as courier van insurance.
3. Haulage Cover: This is for long-distance deliveries or transporting heavy goods.
In any case, it's important to let your insurance provider know that you’ll be using your van for work and personal driving, so that you get the right level of comprehensive coverage.
Paying tax on your work van
The tax implications of using a work van for personal use can be a bit complicated. Here are some key points to consider:
Benefit-in-Kind (BIK) tax: If an employee uses a company van for private use, they may be liable for BIK tax. The BIK rate for van drivers varies, but factors like the van's emissions and the extent of personal use can affect how much you pay.
Fuel tax: If an employer covers fuel costs for personal journeys, this is also considered a benefit, and employees may need to pay tax on this perk.
Tax exemptions: In some situations, employees can avoid the BIK tax charge. This could be because the van is used only for business journeys, or meets the conditions to be regarded as a pool van.
In any case, it’s a good idea to get tax and financial advice specific to your business before buying a van for work and personal driving.
Using a business van as an employee
Employees who are given the use of a company van should know about the “restricted private use condition”. This allows employees to use the van for commuting without incurring a tax charge, provided the van is primarily needed for their job.
Summary
If you’re planning to use a commercial work van for personal driving, it's essential to know about the insurance and tax implications. Make sure that your business van insurance includes social, domestic and pleasure cover (SD&P), and take the necessary precautions when it comes to paying the right tax.
By planning ahead, you can enjoy the benefits of using a work van for personal journeys, too.
Frequently asked questions
What does "personal use" of a work van mean?
Personal use of a work van refers to any driving that isn’t directly related to your work or business activity. This could include things like driving to the shops, visiting friends or going on a weekend trip.
Should I use my work van for non-business activities?
While using a work van for personal reasons can be convenient, first you should make sure that you understand the tax implications and any company policies related to personal use. And always make sure that your business van insurance includes cover for personal driving (known as social, domestic and pleasure).
Will I be taxed if I don't use my company van for personal journeys?
Company van tax, also known as Benefit-in-Kind (BIK) tax, is applied to perks received from your employer, including vehicle use. However, BIK tax usually only applies if the van is used for private journeys.
Can employees use company vans for commuting without incurring extra costs?
Yes, employees can use company vans to travel between their homes and workplaces. If the employer covers the fuel costs for such commutes and certain conditions are met, no additional tax charge will apply.
What qualifies as "insignificant use" of a company van?
Insignificant use refers to minor, secondary private usage, like stopping to buy a newspaper during a work commute. Activities like this are usually disregarded when working out the tax you owe.
