A company van is a taxable benefit only if the employee is allowed private use beyond commuting and insignificant personal trips. Where that line is crossed, the taxable amount for 2026 to 2027 is a flat £4,170, plus £798 if the employer pays for private fuel, and the employer pays Class 1A National Insurance on both. A van that cannot emit CO2 when driven has a nil van benefit.

What counts as a van for benefit in kind purposes?

Section 115 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA), as explained in HMRC’s booklet 480 at paragraph 11.4, defines a van as a vehicle of a construction primarily suited for carrying goods or burden, with a design weight not exceeding 3,500 kilograms. Anything heavier is outside the van rules altogether. A vehicle that is not primarily suited to goods is a car, and the much higher company car tax rules apply instead.

Double cab pickups are the common trap. HMRC’s Employment Income Manual at EIM23151 says that from 6 April 2025 HMRC no longer follows the VAT payload test of one tonne. Each vehicle is judged as a whole, and HMRC expects most double cab pickups to be cars because they are equally suited to passengers and goods. Transitional rules let employers that bought, leased or ordered one before 6 April 2025 keep the old treatment until the earlier of disposal, lease expiry or 5 April 2029.

When does private use of a van become taxable?

A van benefit arises when a van is made available, by reason of the employment, for the employee’s private use. Private use means anything other than business travel, so home to work commuting counts as private use. However, section 155 ITEPA sets the charge at nil if, throughout the year, the van is:

  • available to the employee only for business travel and commuting, and not in fact used for any other private purpose except to an insignificant extent, and
  • available mainly for the employee’s business travel.

HMRC calls this the restricted private use condition. It means a plumber who takes the van home each night and drives it to jobs in the morning normally has no van benefit, provided personal use is no more than insignificant.

A pool van is also exempt. GOV.UK lists the conditions: it is available to and used by more than one employee, is available because they need it for their jobs, is not ordinarily used by one employee to the exclusion of others, is not normally kept at or near employees’ homes, and is used only for business journeys, with private use allowed only where it is incidental to a business journey.

What is insignificant private use?

HMRC’s guidance in 480 paragraphs 14.5 to 14.7 says insignificant means too small or unimportant to be worth consideration. Use is insignificant if it is a few days at most across the year, minor in quality, intermittent and irregular, and very much the exception to the van’s normal pattern of use.

HMRC treats as insignificant HMRC treats as not insignificant
Taking an old mattress or rubbish to the tip once or twice a year Doing the supermarket shopping each week
Regularly making a slight detour to a newsagent on the way to work Taking the van away on a week’s holiday
Calling at the dentist on the way home Using the van for social activities outside work

The test is about actual use as well as the rules on paper. Paragraph 14.20 says that where an employer makes a nil return it must be able to show the conditions were met in practice, and suggests the terms on which the van is provided and mileage records as evidence.

How much is the van benefit and van fuel benefit for 2026 to 2027?

The Van Benefit and Car and Van Fuel Benefit Order 2025 (SI 2025/1254) set the figures for 2026 to 2027 and later years:

Charge 2025 to 2026 2026 to 2027
Van benefit (section 155) £4,020 £4,170
Van fuel benefit (section 161) £769 £798

The figures do not depend on the van’s price, age or emissions, except that a van which cannot emit CO2 by being driven has a nil van benefit from 2021 to 2022 onwards. GOV.UK tells employers to report a zero emission van on the P11D at 0% of £4,170, which is £0.

Van fuel benefit applies only where fuel is provided for a van that is taxed because the restricted private use condition fails. It does not arise if fuel is provided only for business travel, or if the employee makes good the full cost of all private fuel. Unlike company cars, HMRC’s advisory fuel rates do not apply to vans, so the employee needs actual cost figures to make good.

The employee pays income tax on the benefit at their marginal rate. The employer pays Class 1A National Insurance at 15% for 2026 to 2027, reporting on the P11D and P11D(b) by 6 July and paying by 22 July, unless the benefit is payrolled.

Can the charge be reduced?

Section 156 ITEPA applies reductions in a fixed order:

  1. Unavailability. The charge is reduced proportionately for days before the van is first available, after it is last available, and within any continuous period of 30 days or more when it is not available at all.
  2. Sharing. Where a van is available to several employees for private use at the same time, each charge is reduced on a just and reasonable basis (section 157). GOV.UK suggests dividing £4,170 by the number of employees.
  3. Payments for private use. Amounts the employee is required to pay, and does pay, for private use reduce the charge pound for pound (section 158). From 2017 to 2018 onwards payments made by 6 July after the tax year count.

A replacement van provided for fewer than 30 days while the normal van is off the road does not create an extra charge. The van fuel benefit is reduced in the same proportion for unavailability, and also if free fuel is withdrawn during the year.

What does this cost in practice?

Illustration only. An electrician has a diesel van for the whole of 2026 to 2027, uses it at weekends and has a fuel card covering all mileage.

  • Van benefit £4,170 plus van fuel benefit £798 gives £4,968 of taxable benefit.
  • As a basic rate taxpayer at 20%, the electrician pays £993.60 of tax for the year. At 40% it would be £1,987.20.
  • The employer pays Class 1A at 15%, which is £745.20.

If the employer banned private use beyond commuting and insignificant trips, and the electrician kept to it, both charges would be nil. If the van were fully electric, the van benefit would be nil even with weekend use.

How do salary sacrifice arrangements change this?

Where a van is provided through salary sacrifice or another optional remuneration arrangement, section 154A ITEPA taxes the greater of the normal benefit, ignoring any private use payments, and the salary given up. GOV.UK says vans and fuel provided this way must be reported even where they would otherwise be exempt. See our guide to salary sacrifice schemes.

Where do employers commonly go wrong?

  • Assuming commuting makes a van taxable. It does not, if the restricted private use condition is met.
  • Having a no private use policy on paper while staff use vans for shopping or holidays.
  • Treating a new double cab pickup as a van after 6 April 2025.
  • Reporting van fuel benefit where the van benefit itself is nil, or missing it where free fuel is provided.
  • Applying car advisory fuel rates to van private mileage.
  • Keeping no mileage records to support a nil return.

Vans also have their own VAT rules on purchase and fuel, covered in VAT on cars, vans and fuel. For the fuel rules on company cars, which work very differently, see the car fuel benefit charge.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.