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Overview
Company Van & Van Fuel applies where an employer provides a van to an employee that is available for private use, and where fuel is provided for private journeys. Under HMRC rules, a taxable benefit arises unless private use is restricted to insignificant use or the van meets specific exemption criteria set out in HMRC guidance on HM Revenue & Customs rules.
Unlike company cars, van benefits are based on fixed statutory charges set annually by HMRC, with separate amounts for the van benefit and any private fuel benefit. These fixed amounts form the basis of the taxable cash equivalent that must be reported and taxed. Also, vans can be shared between multiple employees. Where a van is available to more than one employee and is genuinely shared, the benefit charge can be apportioned between users based on the period of availability or agreed allocation, effectively splitting the liability across those employees.
The liability treatment for this benefit is consistent:
Income Tax is applied through payrolling across the tax year, and
Class 1A National Insurance is payable by the employer and reported via P11D(b).
Whether a charge applies depends on factors such as availability of the van, the nature of private use, any periods of unavailability, and employee contributions. Customers should therefore assess eligibility and exemptions carefully before determining the reportable value.
This article explains how these events should be applied with BIK module considerations and how to calculate the benefit value. See below for some other articles to assist with preparing and processing benefits in the BIK module:
- For creating this benefit type at company level, go to Configuring Company Benefits
- For creating Vehicle records directly connected to this benefit type, go to Vehicle Management
- For applying benefits to employee records, go to Applying Benefits to Employees: Manual & Data Imports
- For how this looks in Payroll when processing, go to How Payrolled Benefits are Reflected in Payroll
- For National Insurance and Best Practices, please read the National Insurance and Income Tax Handling for Payrolled Benefits article
Contents
BIK Module Configurations and Considerations
The Company Van & Van Fuel benefit is supported in the BIK module as a single outcome benefit type. There are no separate event types because the liability treatment is consistent where a benefit applies.
However, unlike Company Car and Car Fuel benefits, the system does not currently calculate the statutory van or fuel charges automatically. Customers must:
Determine whether a taxable benefit arises based on availability, private use, exemptions, and any periods of unavailability.
Calculate the appropriate statutory benefit value (including any adjustments such as sharing, part-year availability, or employee contributions).
Enter the resulting benefit value manually on the employee’s record.
Once entered, the system will:
Apply Income Tax through payrolling across the tax year, and
Include the value for Class 1A National Insurance reporting at year-end.
Enhancements are planned to improve automation and guidance within the module, with a focus on helping customers determine liability and calculate benefit values more easily, reducing manual effort and increasing accuracy over time.
Event Type: Automatically Handled
This benefit type uses a single event because, where a taxable Company Van or Van Fuel benefit applies, the treatment is consistent: Income Tax is payrolled across the tax year and Class 1A National Insurance is due at year-end.
Income Tax Liability |
National Insurance Liability |
Payrolled, across the Tax Year |
Class 1A (Employer Only), P11D(b) |
Working out the Taxable Amount
To determine the value to enter, the employer must calculate the statutory van benefit charge in line with HMRC guidance. The calculation broadly involves:
Starting with the annual flat rate van benefit charge.
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Adding the separate van fuel benefit charge, where fuel for private use is provided
Please Note: If an employee is to make good on the Van Fuel amount, then they must make good on all of it, or none of it
Reducing the charge if the van is unavailable for part of the tax year (30 days or more in a row)
Apportioning the benefit where the van is shared between employees on a just and reasonable basis
Deducting any amounts the employee pays for private use
The resulting figure is the taxable cash equivalent to record in the employee’s BIK record.
For example:
An employer provides a company van to an employee with ordinary private use permitted, and also provides fuel for private journeys.
Assumptions for the tax year:
Annual van benefit charge: £4,170
Annual van fuel benefit charge: £798
Van available for the full tax year, not shared with anyone else.
Employee contributes £200 toward private use of the Vehicle
The employee did not make good on the entire van fuel charge
Calculation:
Start with van benefit: £4,170
Add van fuel benefit: £4,170+ £798 = £4,968
Deduct employee contribution: £4,968 - £200 = £4,768
Taxable cash equivalent: £4,768
The employer enters £4,768 in the employee’s BIK record.
The system then:
Payrolls Income Tax across the tax year, and
Includes £4,517 for Class 1A National Insurance calculation and reporting at year-end via P11D(b).
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