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Last updated: 25 March 2026

“Company van tax” is usually shorthand for the van Benefit in Kind (BIK) rules. In simple terms: if an employer makes a van available to an employee, there’s normally no BIK if the van is used mainly for work and the only other use is ordinary commuting (home ↔ workplace). HMRC’s P11D working sheet spells this out: if business travel is the main use and the only other use is ordinary commuting, there’s no van benefit charge to report. (assets.publishing.service.gov.uk)

But if the van is available for private use beyond that (for example, personal shopping trips), a taxable benefit can arise — unless the private use is genuinely insignificant.

Do you have to pay company van tax?

You generally may pay van BIK if:

• The van is available for your private use (not just work travel and commuting), and
• Private use is more than “insignificant”.

You generally won’t pay van BIK if:

• The van is used mainly for business travel, and
• The only other use is ordinary commuting. (assets.publishing.service.gov.uk)

HMRC has separate guidance on what “insignificant” private use can mean in practice (for example, very limited, infrequent use that’s too small to be worth considering). (gov.uk)

Practical tip: keep clean records

• A written policy (what’s permitted and what isn’t)
• Job sheets / route planning
• Mileage logs where appropriate (especially if you have multiple drivers or take vans home)

How much is company van tax in 2025/26?

For tax year 2025/26 (from 6 April 2025), the flat-rate van benefit charge is £4,020. (gov.uk)

That’s the “cash equivalent” used to calculate your tax.

Worked examples (van benefit)

Your annual tax cost is broadly:

• Your income tax rate × £4,020
• 20% taxpayer: 0.20 × 4,020 = £804 per year (about £67/month)
• 40% taxpayer: 0.40 × 4,020 = £1,608 per year (about £134/month)
• 45% taxpayer: 0.45 × 4,020 = £1,809 per year (about £151/month)

(Exact outcomes can vary depending on payroll setup and your circumstances.)

Don’t miss the fuel benefit charge

If your employer also provides fuel for private use in a company van, a separate flat-rate van fuel benefit charge can apply.

For 2025/26, the van fuel benefit charge is £769. (gov.uk)

A simple way to think about it:

• Your income tax rate × £769 (if the fuel benefit applies)
• 20% taxpayer: about £154 per year
• 40% taxpayer: about £308 per year

If you want to avoid a fuel benefit charge, employers often require clear evidence that private fuel is either not provided or is fully reimbursed under an agreed method.

Where to check the rules and rates

The most reliable place to start is HMRC/GOV.UK guidance on the van benefit charge and fuel benefit rates, plus HMRC’s employment income manual for edge cases (like what counts as “insignificant” private use). (gov.uk)

Insurance relevance (quick clarity)

BIK is a tax issue; insurance is separate. Even if there’s no BIK due, you still need the correct insurance for business use, and it should reflect how the van is used (including who drives it and what’s carried).

Sources

1. GOV.UK / HM Treasury measure note — Van benefit charge and van fuel benefit charge from 6 April 2025 (tax year 2025/26: van benefit £4,020, van fuel benefit £769).
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2. GOV.UK / HMRC Employment Income Manual — “insignificant” private use guidance (EIM22745).
   View source
3. HMRC P11D Working Sheet 3 (vans) — confirms no benefit charge where used mainly for business travel and only other use is ordinary commuting (example sheet).
   View source