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Van Private Miles

Van Private Miles

Client has several employees who runs company vans. No private mileage is permitted even though vans are taken home (drivers go to different destinations each day and only to office to collect equipment etc). He has now fitted a tracking device to monitor any private use and intends to charge employee 40p/mile for any deviations. Does the van benefit apply and how it is mitigated by this mileage charge?
Simon Hall


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By neileg
03rd May 2006 11:49

HMRC will ignore insignificant private use. Your client is prohibiting private use. That's fine, no van benefit arises.

Now your client is, by implication, permitting private use because he is going to charge for it. That is going to trigger a van benefit charge. Is the intention that the 40p is a penalty charge rather than a permissive charge?

I think a rethink is needed here, if van benefit is to be avoided (bearing in mind the amount is going up significantly).

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03rd May 2006 12:14

Well spotted, Neil
The contradiction passed me by. Perhaps the 40p charge is to be applied to commuting travel only, with any other private use completely forbidden? Presumably that arrangement would not fall foul of the rules.

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By yeboyye
07th May 2006 10:53

An interesting situation. Many thanks to Neil and to David.

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03rd May 2006 10:10

There is no charge for ordinary commuting. This applies if the van is provided on terms that prohibit private use other than commuting, which would appear to be the case here. I understand that any other private use, if insignificant, will not necessarily breach this condition. Examples of insignificant use would be to call at dentist on way home or make regular short detour to pick up a newspaper. Weekly shopping trips would not be insignificant.

I don't believe there is any provision to 'exempt' private use via reimbursement to employer. The 40p/mile contributions will simply reduce the benefit charge by the smae amount.

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11th May 2006 10:46

From 6 April 2005!
Although the higher benefit charge does not kick in until April 2007, the exemption for insignificant use is effective from 6 April 2005 - ITEPA 2003 s.114(3A)

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By hallsi
10th May 2006 19:55

Van Benefit
Thanks for all your comments. I was under the impression that the van benefit would still apply less any contribution for private use, therefore if only 10 miles private use are driven the benefit will be £500 less £4. I am still of that opinion.

Incidentally the new higher van benefit charge does not apply until 6th April 2007 onwards and only at this point does incidental private use negate the need to apply the van benefit charge. Prior to then, as I understand, any private use means a van benefit charge applies which has caused a headache for those people who have to take their van home such as rural ambulance drivers etc.

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