Van Tax Explaination:
If you are one of the many thousands of UK motorists who benefit from driving a company car, or if you own a business, being tax savvy when choosing your vehicle could save you a considerable amount of money courtesy of Her Majesty's Government. This is because certain vehicles are not classed as cars at all, but as light commercial vehicles, and driving one could save you quite literally thousands and thousands of pounds in tax every single year!
Thanks to their combination of reliability, drivability, impressive styling and hard work/hard play ethic, vehicles like the Nissan NV200 and Ford Transit, for example, have developed a firm following in the UK. Yet despite their exceptional good looks these vehicles, even with accessories fitted, means that for BIK tax and VAT purposes every single model is classed as a light commercial vehicle (LCV).
Commercial Vehicle Tax Facts for Employees
All featured vans are classed as light commercial vehicles (LCV's), and all LCV's enjoy a standard Benefit in Kind liability irrespective of their purchase price or how many accessories you fit. This means that if you are a tax payer in the 40% tax bracket, driving a Mercedes Sprinter or Peugeot Bipper for example, you could save in the region of £4,000 every year on Benefit in Kind tax payments compared with a similarly priced passenger car. How would you like to have an additional £300 or more in your pocket every single month!
Commercial Vehicle Tax Facts for Employers
All featured vans, even if you fit accessories are classed as light commercial vehicles (LCV's).
NB As tax liability can vary according to circumstances we would always suggest that you check with your accountant or tax advisor to see what allowances you are eligible to take advantage of.
This table compares the tax payable on a Mitsubishi L200 Animal Double Cab and equivalent vehicles with a similar retail price. Despite its sophisticated 4-wheel drive system, its upgraded engine and top-of-the-range specifications, such as leather seats and satellite navigation - all if which make it a highly desirable vehicle, this pickup truck shows a BIK and fuel benefit tax saving of up to £4,336!
Type | Mitsubishi L200Animal D/C | Ford Mondeo 2.0 TDCi Ghia Estate Manual | Nissan X-Trail 2.0 dCi Sport | Jeep Cherokee 2.8 CRD Limited |
---|---|---|---|---|
OTR price (inc. VAT) | £23,573.85 | £21,874.36 | £22,859 | £24,077 |
Vehicle BIK liability | £3,000 | £4,812 | £6,857 | £8,426 |
Fuel benefit in kind † (inc. private use) | £500 | £3,718* | £5,070* | £5,915* |
Emissions | LCV | 156g/km | 198g/km | 222g/km |
Tax liability as a percentage | n/a | 22% | 30% | 35% |
20% tax band | ||||
Vehicle tax @ 20% | £600 | £962 | £1,371 | £1,685 |
Fuel benefit tax @ 20% | £100 | £744 | £1,014 | £1,183 |
Total tax payable for 20% tax payer | £700 | £1,706 | £2,385 | £2,868 |
40% tax band | ||||
Vehicle tax @ 40% | £1,200 | £1,925 | £2,743 | £3,370 |
Fuel benefit tax @ 40% | £200 | £1,487 | £2,028 | £2,366 |
Total tax payable for 40% tax payer | £1,400 | £3,412 | £4,771 | £5,736 |
* Business mileage may be reclaimable at up to HMRC approved rates.
† Based on 22% charge for Ford (19% plus 3% diesel surcharge), 30% charge for the Nissan (27% plus 3% diesel surcharge) and 35% charge for Jeep on £16,900 fuel BIK based figure. Fixed figures to increase by RPI each year.
Disclaimer
Any tax allowances detailed are subject to timing differences and the status of your business. As a result, you should check with your Accountant or Tax Adviser that you are eligible to take advantage of these allowances. Personal use of these vehicles may give rise to a tax assessment and we recommend you discuss this with your Accountant or Tax Adviser. Details were correct at time of publication. Tax information is provided as a guide only. Tax liability can vary according to circumstances. Please contact your local Inland Revenue office for further information.
The answer given is a guidance to provide understanding about the concept of van.
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