A taxable benefit in the form of a Van Benefit Charge (VBC) arises when an employee is provided with a company van and it is used for personal journeys.

There is a tax charge on the private use of an employer's van. The tax cost is calculated as the employee's rate of tax times the benefit for the year in question.

Year	2021-22	2020-21	2019-20	2018-19	2017-18	2016-17	2015-16	2014-15
Van benefit	£3,500	£3,490	£3,430	£3,350	£3,230	£3,170	£3,150	£3,090
Van fuel benefit	£669	£666	£655	£633	£610	£598	£594	£581

 

Autumn Budget 21 proposes that the van benefit charge is increased to £3,600 for the 2022-23 tax year. See:  Autumn Budget 2021: Employment Taxes

Zero-emission vans

The van benefit charge exemption for zero-emission vans made a U-turn between April 2015 and April 2021.

From 6 April 2015, a reduction in the Van Benefit Charge (VBC) applies for zero-emission vans.

The VBC for zero-emission vans is a percentage of the full charge as follows:

Tax year	% of van benefit charge
2015-16	20%
2016-17	20%
2017-18	20%
2018-19	40%
2019-20	60%
2020-21	80%
2021-22	Nil*

 

*  Finance Act 2021 provides for a nil VBC on zero-emission vans for 2021-22 onwards. 

For example:

The van benefit charge (VBC) for vehicles that have CO2 emissions is £3,490 in 2020-21.

The VBC for a zero-emission van for that year will be £2,792 (£3,490 @ 80%). That is a cost of £558 per year for an employee on basic rate tax. The Class 1A National Insurance Contributions cost to the employer will be £385.30 (£2,792 @ 13.8%).

What's new?

From 6 April 2022

• In its paper, Build Back Better: Our Plan for Health and Social Care, the government proposes a 1.25% increase in the rates of Employee (Class 1), Employer (Class 1, 1A and 1B) and self-employed (Class 4) NICs for 2022-23.
• From April 2023 onwards the Levy will also apply to those above State Pension age who are still in employment.
• The increase will not apply to Class 2 NICs or Class 3 NICs.

See Increase to National Insurance Rates

From 6 April 2021

• Finance Act 2021 following policy paper, Income Tax changes to the van benefit charge from 6 April 2021 reduces the van benefit charge (VBC) to nil for zero-emission company vans which are provided to employees and available for their private use.

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Would you like to know more and pick up some Top Tax Tips? Get your motor running with our guides to:

Vans and Commercial vehicles
What are the benefit charges? When do they apply? Can you reduce them? How are you taxed on van and van fuel benefit examples? How is the employer taxed? What are the tax benefits of a low emissions van? What is meant by private use? How are lorries taxed? What do the tax tribunals have to say on van benefits?

Car or Van: for VAT
What is a car for VAT? What is a van for VAT? What VAT can be recovered on a car that is bought? Leased? What about fuel? Or mileage reimbursements? 

Company Cars
Company car tax: How do you work out car benefit? How do you work out car fuel benefit? Are there savings for low emissions vehicles? How do you reduce car benefit? Cars and the tax tribunals and Top Tax Tips.

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