Where as an employee your company van is made available to you for private use,  you will only be taxed on it if you actually use the van for private journeys.  Travelling from home to the main place work and vice versa are allowed without these being classed as private journeys.  Furthermore, you are allowed insignificant private use without any tax implications.  Examples of these include stopping at a newsagent on the way to work or calling at the dentist on your way home. If these circumstances do apply to you then it would be best:

• To keep a mileage record on the use of your van

• Sign an agreement with your employer saying that the van is only to be used for business and insignificant private use and for travelling between your home and the main place of work.

Where the company van is available for private use and you use it for private journeys, this will raise a taxable benefit in kind of £3,000 per annum. For a basic rate tax payer, this would result in £600 tax bill per year. Further, if you are also allowed free or subsidised fuel, this will result in additional benefit in kind of £500 per annum, resulting in a further tax bill of £100 per year if you are a basic rate tax payer.

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As an employee you will only be taxed on a company van if you use it for private (non business) journeys. Private use other than commuting (work to home and vice versa) means using the van for your social activities or your supermarket shopping.

If your employer  allowed you unlimited use of the van, this will be assessed under PAYE as benefit in kind of £3000. If your employer also pays for the private fuel, there will be additional £500 benefit in kind on you. If you are basic rate tax payer (20%)  for the tax year 2009/10, your tax bill for private use of the van will be £700.

Where your only private use of the van is for home to work  travel (and vice versa) this is not treated as private use so you will not be taxed under these circumstances if all other private use is not allowed by your employer. Your employer should ask you to sign an agreement stating that you will only be allowed to use the van for private purpose to travel from your home to work and vice versa. Any other private use would not be allowed. You also need to keep mileage logs recording your mileage for each business journey and the reason for the journey.

To ensure you do not end up with an unwarranted tax bill, please make sure you that you sign the only business use agreement before the new tax year starts – 6th April.

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