Van drivers and employers could face additional tax fees following a recent ruling which redefined the legalities of taxing a van, legal advisory firm Blick Rothenberg has warned.
In a recent case involving Coca Cola, the Upper Tribunal (UT) held that any van that is not held to be primarily a “vehicle for the transport of goods becomes classified as a multi-purpose vehicle”. The UT specifically identified vans such as the VW Transporter Kombi T5 multi-purpose vehicles rather than vans.
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As a result, drivers could face a car benefit charge where there is any private element to the vehicle’s use.
“This will apply even where private use is very insignificant compared to the wider use of the vehicle,” said Robert Salter, specialist in expatriate and employment taxes at Blick Rothenberg. “The annual taxable benefit charge that accrues for employees in this regard can be substantial, as it based on the core (list price) of the vehicle when new and the vehicle’s CO2 emissions level.”
For example, a vehicle with an official list price of £25,000 and a CO2 charge of 25% could create an annual benefit-in-kind charge for the employee of £6,250. This would create a tax charge for a 20% tax payer of £1,250.
Salter continued: “Additionally, if the fuel costs of private motoring are also paid for by the employer, employees can also face a fuel benefit charge based on the car fuel rules rather than the (much cheaper) van fuel benefit rates.
“In addition, their employers will face an additional NIC liability of 13.8% on the value of the car scale and car fuel scale tax benefit charges that arise for their affected employees.”
While HM Revenue and Customs are yet to formally alter their guidance in this area since the ruling, Salter believes the government could see this as a “major opportunity to gain additional revenue for the ‘white van man’”.
