TAX FREE VAN BENEFIT FOR EMPLOYEES

Revenue & Customs will allow a van to be used for transport to and from work without a benefit-in-kind assessment arising.

To ensure that it remains tax free the following steps must be taken

1. Make it a condition of the driver’s employment contract that whilst they can use the van for ordinary commuting, no other private use is permitted by them (or their family). If any of your drivers fit into the insignificant private use category there should be no charge for 2006/7.

2. Have a signed agreement with the employee, which states that:

“The Van is made available to the Employee for travel on Company business. The Employee is permitted to use the Van for ordinary commuting to and from home, the Employee’s place of work, but all other private use is strictly prohibited. According to HMRC guidance, prohibited private use includes using the Van to do the supermarket shopping each week, taking the Van away on a week’s holiday or using the Van outside of work for social activities.

The Employee is also required to keep a daily mileage log in the vehicle recording the reason for the journey and the number of business miles travelled.”

3. Record that the van driver has an alternative vehicle for private journeys.

4. Write into the Taxman to confirm which Van drivers have insignificant private use, listing their names and NI numbers. Ask that their tax codes for 2007/8 be revised accordingly. Now is also a good time to check that no-one has been paying tax on a benefit that doesn’t exist.

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