If you’re not up to speed with how van tax works, you might fall foul of HMRC’s rules and end up with an unexpected and costly bill. But don’t worry, van tax doesn’t need to be taxing. Here, AXA summaries the information from the DVLA and explains everything you need to know about taxing a van.
Vehicle Excise Duty (VED): Road tax for van drivers explained?
Vehicle Excise Duty (VED) is just another name for road tax (formerly known as a ‘tax disc’). It’s an annual tax and most vehicles in the UK need to pay it. Even if you’re exempt from paying for whatever reason, you still need to tax your vehicle. You can get a fine or penalty points on your licence if you’re caught driving a vehicle that isn’t taxed.
How much is my van road tax (VED) in 2022?
How much van road tax you need to pay depends on when your van was first registered. The rate in 2022 are as follows:
- VED Tax for light good vehicles (TC39) which are not over 3,500kg and registered before 1st March 2001 is £290.
What tax band is my van in?
The table below gives an overview of the 2022 tax bands so you know how much you need to pay in 2022. (These figures relate to vans less than 3,500kg)
|
Vans registered before 2001
|
Vans registered on or after March 2001 |
Euro 4 and 5 vans
|
|
£180 for engines up to 1549cc (£189 by monthly direct debit)
£295 for engines over 1549cc (£309.75 by monthly direct debit)
|
£290 (£304.50 if paying monthly direct debit) |
£140 (£147 if paying monthly by direct debit) |
Visit the government’s website for more information about how much VED van drivers need to pay.
Is van tax the same as car tax?
Taxing a van is slightly different to taxing a car. The main difference between van and car tax is how it’s calculated. How much car tax you pay is based on your car’s CO2 emissions in its first year and on a flat rate depending on the vehicle type after that. Meanwhile, van tax is charged at a fixed rate depending on how old the vehicle is, the engine size and its CO2. Unlike cars, all van types whether diesel, petrol or other fuels types are all taxed at the same rate.
How to pay road tax online
Paying your road tax online is pretty simple and should only take a matter of minutes once you’ve gathered all the necessary documents. To pay your van tax online, you just need a debit or credit card. And if you’d rather spread the cost, you can set up a Direct Debit online, too.
To make it easy for you, we’ve broken down how to pay your van online into six quick steps:
- Get documents together. This includes a recent reminder slip from the DVLA (V11), your vehicle logbook (V5C) or the green ‘new keeper’ slip if you’ve recently purchased the van.
- Go to the UK Government’s vehicle tax service webpage
- Select whether you have a V11 or another document
- Enter vehicle’s registration number and 11-digit reference number found at the bottom of the V5C document
- Check and confirm details
- Choose payment option – annual or monthly
How to cancel your van road tax?
You can cancel your road tax online by telling DVLA you no longer have the vehicle or that it’s off the road. You’ll get a refund for any full remaining months which is calculated from the date the DVLA gets your information.
You can only cancel your tax with the DVLA if your vehicle has been:
- sold or transferred
- taken off the road (e.g. keeping it in a garage) - this is called a Statutory Off Road Notification (SORN)
- written off by your insurance
- scrapped
- stolen
- exported out of the UK
- registered as exempt from vehicle tax
If you have cancelled your van tax and do not get your refund cheque within 8 weeks, you should contact the DVLA. There are three main ways to get in contact DVLA:
- Phone - 0300 790 6802 (call charges apply)
Company van tax: benefit in kind guide
If you drive a van for work and it’s provided to you by your employer, you’ll need to consider whether you need to pay benefit in kind (BIK) tax and how much that’ll be. If you’re an employer, it’s also a good idea to have a sound understanding of BIK so you can be armed with answers should your employees have any questions.
What is a benefit in kind?
Benefits in kind are benefits that employees get but are not included in their salary. They are sometimes called perks or fringe benefits. They include things like company cars and vans, gym memberships and private medical insurance.
That’s why benefit in kind tax for vans is sometimes known as company van tax.
Benefit in kind tax for vans?
Benefit in kind (BIK) tax is different for cars and vans. BIK for cars is based on the car’s CO2 emissions and the employee’s salary, whereas BIK for vans is charged at a fixed rate.
What does HMRC class as a van?
HMRC defines a van as “A vehicle primarily constructed for the conveyance of goods or burden. A gross vehicle weight - fully laden - not exceeding 3,500kg.”
This definition covers:
- panel vans with two or three seats in the front
- chassis cabs fitted out with conversions
- two-seat commercial SUVs and pick-up trucks
The rules for double-cab vans aren’t as straightforward so it’s best to check the van’s V5C registration document. If it says N1 or N2 it’s a van and M1 or M2 means it should be taxed as a car.
When do you need to pay benefit in kind tax?
If you only use your van for work, you don’t need to pay benefit in kind (BIK) tax. You’re also not expected to pay anything if your van is used mostly for work with the occasional essential detour as this is classed as 'insignificant private use'.
However, if your van doubles as the school run vehicle or you drive it on your days off, it’ll be taxed as a ‘perk’ and you’ll need to pay BIK.
How much benefit in kind van tax will I pay?
To work out how much benefit in kind tax you need to pay, you just multiply your income tax band (e.g. 20% or 40%) by the BIK tax value. The BIK tax value for vans is fixed at £3,600.
So, if you pay 20% income tax, you’ll pay £720 benefit in kind tax (20% of £3,600 = £720). And if you’re a 40% taxpayer, you’ll pay £1,440 (40% of £3,600 = £1,440).
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Tax band |
How much you’ll pay |
|
20% |
£720 |
|
40% |
£1,440 |
The fixed BIK rate of £3,600 can be reduced if:
- you can’t use the van for 30 days in a row
- you pay your employer to use the van
- other colleagues use the van – divide £3,600 by the number of people who use it
Fuel benefit: how much tax will I pay?
If you use a work van for private journeys and your employer picks up the fuel bill, you’ll also be taxed on that benefit. The benefit in kind rate for private mileage paid for by employers is fixed at £688 You just need to multiply it by your income tax band (e.g. 20%, 40%) to find out how much you owe HMRC.
Therefore, if you’re a 20% taxpayer, you’ll pay £137.60 (20% of £688 = £137.60) and 40% taxpayers will pay £275.20 (40% of £688 = £275.20).
|
Tax band |
How much you’ll pay |
|
20% |
£137.60 |
|
40% |
£275.20 |
Employees can avoid paying this, or it can at least be reduced, if:
- you can’t use the van for 30 days in a row
- you pay your employer back for all private fuel
- you stopped receiving money for fuel during the tax year
As more businesses look at achieving net zero goals, it’s possible that you have a more environmentally friendly vehicle. Electric company vans do not fall into the fuel benefit charges due to there being no fuel needed for the cars, however hybrid cars are charged the full amount.
Electric vans: tax exemptions and incentives?
Do you pay road tax (VED) for electric vans?
To encourage van drivers to go green, the government introduced electric van tax relief measures which means road tax (VED) for fully electric vans is £0.
Hybrid and plug-in hybrid van owners still need to pay the same VED as those who drive petrol and diesel vans.
Do you pay benefit in kind tax for electric vans?
To encourage employers to embrace electric vans BIK has often been reduced over the years for electric company vans. In 2015/2016 users were charged 20% of the standard rate and in 2020/2021 it had reached 80% of the standard rate.
As of April 6th, 2020, it was announced that to encourage employers to embrace electric vans further the BIK for electric company vans would be reduced to 0% from 6th April 2021
For the 2022/2023 tax year, the government had continued this 0% BIK charge on electric vans, making it an extremely economical way to have a company van.
All links are checked and valid at time of publishing, 19 July 2022.
