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Summer 2004 Newsletter

Van for the Money

Company cars are quite heavily taxed these days - an annual charge on up to 35% of the list price of the car when it was new, and the same percentage applied to a figure of £14,400 if your employer provides you with free fuel for private motoring. And the employer pays National Insurance on the benefits as well. This is all supposed to be part of 'green policy', to discourage people from using cars (or perhaps it just collects quite a lot of tax).

People who drive vans have a much lower tax charge - if they can use the van privately, the basic charge is tax on £500 a year, and that includes any amount of fuel provided by the employer. Of course, some people would say that there isn't really much of a benefit in having the use of a van full of tools, and there shouldn't be a tax charge at all. But where there's a tax, there are ingenious people who look for a way around it, and some people have come up with the idea of a vehicle that you use like a car but is taxed as a van: the 'luxury double-cab pick-up'. Because it's got a flat-bed behind the cab, it's a goods vehicle, and that makes it a van for tax purposes. But it has the comfort inside of a SUV. And the tax is a fraction of what it would be on a similar sized car.

Last year, the Government announced a review of the taxation of vans, and it seemed likely that they would put a stop to this. In the end, they haven't,  two changes were announced in the March Budget, and they don't make much difference. First, from April 2005, there will be no charge at all on van drivers whose only private use of the vehicle is driving to and from their home. That's a private journey - commuting - but it won't be taxed. Then, in April 2007, the taxable benefit for those van drivers who do have private use will rise from £500 to £3,000, and a separate charge on £500 will be introduced for private fuel.

But that's still a lot less than 35% of the list price and 35% of £14,400. Unless the Revenue plan to look again at 'what's a car' and redefine double-cab pick-ups as cars, they still get the lightest tax possible.