If you are looking to get a van or you’re already a driver of a van, then you will know that tax for a van is slightly different than that of a car. One of the main differences between taxing a car and a van is how the van tax rates are calculated. The rules have changed over the years, so it is important that your business understands the costs that are involved and how it can impact your business.
How much is my van road tax?
If you want to know how much is van tax, then it does differ from car tax. What you pay for a car is based around the car’s carbon emissions. However, with van road tax prices tend to be more of a fixed rate. The road tax on vans that you will pay usually depends on the age of the van that you are driving, but there are other considerations such as the engine size as well as the van’s carbon emissions rating. So vans with cheap road tax will be vehicles that are newer and have fewer carbon emissions, perhaps an electric vehicle, for example.
To make things even more confusing, there have been some changes in recent years, to both the road tax on vans, as well as the company’s van tax. If you don’t keep up to speed on how this all works, then it could mean that you’re not following the rules of HMRC, and it could lead to an expensive bill. With that in mind, here are all the things that you need to know when it comes to taxing a van.
Road tax for van drivers
VED, or vehicle excise duty, is another name that you might come across when looking into vans with cheap road tax, as it is simply another name for road tax. It is a tax that is annual, and the majority of vehicles in the UK need to pay for it. Even if you are someone who is exempt from paying road tax, such as a disability or because it is an electric vehicle, you still need to tax it. If you are caught driving a van that is not taxed, then you can face fines and even get points on your licence.
The van road tax prices will depend on a number of things, including the date that your van was first ever registered, as outlined below:
- As of 2021, if vans were registered before 2001, then there are payments of £165 or of £270, paid for twelve months. The amount payable between those two amounts can vary, depending on the size of the van’s engine.
- If the van was registered after on or after March 2001, then the payment is £265.
- If the van is a Euro 4 or Euro 5 van, registered after 2003, then the cost for van drivers is £140 each year.
As with any vehicle, van tax can be paid online by going to the government’s website. You will need details of the van, as well as a ‘new keeper’ form if you have bought the vehicle recently. Otherwise, you will just get a DVLA reminder slip. You will need to have a bank card to pay, or the cost can be spread using a Direct Debit. If the car gets stolen, scrapped, damaged, or transferred to another owner, you can cancel the road tax on it. If applicable, you will get a refund of any of the months left that have been paid for upfront.
A guide for van drivers for benefit in kind tax
If you drive the van for work and it is given to you by an employer, then you need to work out if you need to pay any tax called Benefit in Kind (BIK). If you are an employer that uses vans for employees, then understanding how the BIK tax works is important, as you may have employees asking questions about it, and you’ll need to know the answers.
Any benefit in kind is a benefit that someone gets that isn’t part of the paid salary. These could be classed as benefits or perks, but in this instance, would be the use of a van for work. As a result, BIK for vans can be referred to as company van tax. In the UK, BIK differs for cars and vans. BIK for cars is solely based on a car’s carbon emissions, alongside the salary of the employee. In contrast, BIK for vans is something that is set at a fixed rate.
When would you need to pay BIK tax?
If you only drive a van for work, then you wouldn’t need to pay any BIK tax. You are not expected to pay anything else even if the van is used for work and occasionally some private use. If you use the van for everything, such as work and your normal life like school drop offs and grocery shopping, then it will be taxed as a park from work, and you will have to pay BIK.
The rate that you will pay varies, as it relates to your salary and what level of income tax you pay. The BIK tax fixed rate for vans is £3490. If you are a 40% taxpayer, you will pay 40% of £3490 (£1396) and if you’re a 20% taxpayer, then you will pay 20% of £3490 (£698). All of these costs need to be considered when getting a van for work and for recreational use, alongside road tax costs for vans.
If you are looking to keep the costs of using vans for work low, then it is important to think about the kind of van that you are driving, as well as the use that it will have. There are, of course, upfront costs for vans, with most newer vans costing more, but being more carbon-neutral and cheaper road tax, and older vans being cheaper to buy, but costing more in road tax. Assess your needs and what is affordable, and it will help with your decision.