Van tax & BIK calculator
A company van with private use is taxed on a flat benefit, not a slice of its price. This shows the yearly tax at your rate, and why an electric van costs nothing.
How van tax works
A company van is taxed on a flat cash-equivalent benefit, not on its price. Every diesel or petrol van with private use carries the same fixed van benefit, and you pay income tax on that figure at your own marginal rate. So a basic-rate driver pays 20% of the benefit, and a higher-rate driver pays 40%, whatever the van cost new. This is why a van is usually far cheaper to run through a business than a company car of similar value.
Two things change the number. A fully electric van has a van benefit of £0, so there is no tax on the van at all. And if your employer pays for fuel you burn on private journeys, a separate van fuel benefit is added on top and taxed the same way. Pay for your own private fuel and that part disappears.
Worked example
On a £35,000 salary, a diesel van available for private use gives a £4,170 benefit. As a basic-rate taxpayer you pay 20.0% of that, so about £834 a year, roughly £70 a month off your pay. Switch to an electric van and the van benefit drops to £0, so the tax falls to nothing. Add employer-paid private fuel on the diesel and the benefit, and the tax, both rise.
Common questions
How is a company van taxed differently from a company car?
A van uses a flat cash-equivalent benefit, not a percentage of list price. Whatever the van costs new, a van with private use carries the same fixed benefit, and you pay income tax on that at your marginal rate. A company car instead multiplies its list price by a CO2-based percentage, so an expensive car is taxed far more heavily than a van of similar value.
Do I pay tax on a van I only use for work?
No. If your private use is limited to ordinary commuting and occasional insignificant trips, there is no benefit and no tax. The benefit only applies once the van is available for wider private use, so a genuine work-only van is not taxed.
Is an electric van tax free?
The van benefit charge for a fully electric van is £0, so there is no income tax on the van itself. That is the main tax advantage of an electric company van over a diesel one, which carries the full flat benefit.
What is the van fuel benefit?
If your employer pays for fuel you use privately in the van, a separate flat fuel benefit is added on top of the van benefit, and you pay income tax on that too. If you pay for your own private fuel, or the employer only funds business mileage, there is no fuel benefit.