Tax relief for work vehicles

If you or your employees drive a van, then there is good news.

In the 2004 Budget the Chancellor announced major changes to company van taxation. At the moment employees who have private use of a company van are charged tax on a benefit in kind of £500 (or £350, if the van is over four years old at the start of the tax year). From next April that charge will be reduced to nil if they have the van mainly for business t ravel and minimal private use other than for journeys to and from work is insignificant.

The first of these changes comes into force on April 6, 2005. Helpfully, Inland Revenue has given some examples of insignificant private use.

An employee who takes rubbish to the tip once or twice a year; regularly makes a slight detour to stop at a newsagent on the way to work; or calls at the dentist on the way home; is making insignificant private use of the van and would not have a tax charge.

David Geldard, employment taxes specialist at MacIntyre Hudson advises that for the van tax charge to be reduced to nil, employers need to contact Inland Revenue now if they have company van drivers who meet the conditions

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