Safe Speed Forums

Van fleet operators have been advised by leasing firm ALD Automotive to take swift action to guard against their drivers seeing a 600% increase in benefit-in-kind tax bills in 2007/8. ALD Automotive notes there are less than three months to go until the HM Revenue & Customs’ (HMRC) change in benefit-in-kind tax rules on vans is introduced.

From April 6, 2007, the scale charge for ‘unrestricted’ private use of a van will rise to £3,000 - from £500 - with an additional £500 charge for employer-provided fuel used privately.

Under these rules, basic rate taxpayers who choose to have unlimited private use of their vans will pay 22% of £3,000, equal to £660 benefit-in-kind tax from 2007 - up from the current £110 a year - and a further £110 for using company-funded fuel privately. The equivalent charge for 40% tax-paying van drivers will be £1,200 plus a £200 fuel charge. In addition, employers’ Class 1A National Insurance contributions will also soar.

HMRC has indicated that:

- Home to work is not classed as private use

- Van drivers, on their way to work, can still stop at their local newsagent for a paper and a bar of chocolate without incurring a tax charge

- But taking the van to do the weekly supermarket shop of to take the family on holiday will incur a private use tax charge

John McMinn, ALD Automotive’s LCV national sales manager, said: “Despite a two-year notice of the change I am aware that some companies have still not changed operating procedures to safeguard their van drivers from incurring a potentially huge tax bill increase.”