Are you looking to find out how you can reduce the tax bill on your company van? Look no further. Here you’ll find trusty tips that’ll help to cut the cost of taxing your company van.
For many people, a company van for private use is an economical alternative to a company car, particularly when it comes to smaller vans with car-like cockpits. However, company vans still attract a tax if they are used for personal journeys. So how are they taxed?
Company van tax
For those company vans that are made available for private use, there has been a set tax rate since 2007. Rather than paying tax that depends on the list price of the vehicle, it is set at £3,000. What does this mean? 20% of taxpayers will incur a cost of £600 per year for having private use of a company van. If private fuel is paid for, this is considered a benefit, and you will pay tax on a further £564, resulting in a tax of just over £110.
The advantage of company van tax
A company car’s tax rate would be based on its list price whereas a tax rate for a van stays the same, regardless of whether you drive a small van or a big transit van. This means that if you’re a 20% taxpayer, you’ll never pay more than £600.
Some may argue that using a van for personal use doesn’t have the same effect as driving a brand new company car; however, if all you’re concerned about is getting from A to B, driving a company van has its financial benefits.
How do you cut costs of company van tax?
By sharing the company van with a colleague, you can reduce the tax bill. So how do you calculate this fairly? Work out the percentage for how much each of you uses the van. This way, you’ll split the amount of van tax owed between you legitimately. Based on the employees being basic taxpayers, the total van tax figure owed would be £600 so you work out how much each employee needs to pay using this amount.
If however, the van was not made available to one of the employees for a period of 56 days then the following reduction can be made: £360 x 309/365 = £304.77. This is based on the following formula:
CE x (Y-D)/ Y
How is this formula determined? CE stands for the amount of the cash equivalent before any deduction, Y accounts for the number of days in the tax year being considered and D is the total number of days of which the van is unavailable.
So, now you’ve learnt some top tips regarding tax reduction on your company van, you’ll certainly save yourself from excessive spending.
Feeder Commercials are a specialist supplier of used commercial vehicles, with over 20 years’ experience in the industry. If you’re look-ing for a company van, be sure to check out Feeder Commercials’ vast selection of small, medium and large vans by visiting online.