Van tax changes 2018: what drivers need to know

Transport and logistics

22 May 2018

This year’s Budget 2018 brought with it plenty of new announcements and tax changes, so what changes has the Budget brought for the for the commercial van driver?

In fact, the changes have been very few. Apart from rises to the rates, little has changed since last year.

Here’s our at-a-glance guide to 2018’s Vehicle Excise Duty (VED) and benefits for commercial vans.

Commercial vans and the new diesel rate

The big driving headline from April’s Budget was that the first-year VED rate for new diesel cars would go up by one band. The good news is that the increase in costs for diesel cars does not apply to commercial vans.

What counts as a commercial van? A van is normally classed as a ‘light goods vehicle’ if it meets certain criteria. For example, if it has a double cab, a rear pick-up bed for goods, no windows on the rear sides, and its original purpose is commercial and not just domestic, it’s a van.

Vehicle Excise Duty (VED)

If your van was registered on or after 1 March 2001, you’ll pay a flat rate of £250, up £20 on last year (or £262.50 if you pay monthly by Direct Debit).

If your van is a bit older, and was registered before March 2001, you’ll pay £155 a year if the engine is 1549cc or less (£162.75 Direct Debit), or £255 for larger engines (£267.75 Direct Debit). Again, it’s a modest rise of £5 per annum, and is the same rate as domestic cars with the same registration date and engine size.

Euro 4 and Euro 5 van VED

Euro 4 and Euro 5 vans pay a different rate of VED. Like cars, new light goods vehicles must comply with the European exhaust emissions standards. There are currently six standards dating back to 1992. Between them, the standards Euro 4 and Euro 5 cover the period from 1 March 2003 to 31 December 2010. Vans registered during this period pay £140 per annum provided they’re under 3,500kg revenue weight (no change from last year).

Benefits-in-kind for van users

This refers to any non-work use of your commercial vehicle. If you’re using it solely for work, you won’t attract any benefits-in-kind tax. If your van is used mostly for work with the occasional essential detour, that’s fine, and it counts as 'insignificant private use'. However, if your van doubles as the school run vehicle or you drive it on your days off, it’ll be taxed as a perk.

Benefit-in-kind taxation is set based on a flat rate of £3,350 for private use of a business van, up from last year’s £3,230. It’s taxed according to your income tax band, so it will either be 20% or 40% of £3,350.

Fuel benefit costs

If you use a work van for private journeys and the business picks up the fuel bill, the driver will also be taxed on that benefit. This year, the rate is £633 (up from £610), and again, what you pay depends on your income tax bracket. Employees can avoid paying this if they reimburse the company for any private fuel used.

Exempt vehicles

This has changed, as the focus moves to completely emissions-free vehicles. Now, to be classed as exempt from VED, your van must be 100% electric or hydrogen-powered: hybrids still have to pay some duty as they are not completely emission-free.

Keep your van moving – no matter what

At AXA, we want to make sure protecting your van, and keeping your business moving, is as simple as possible. Take a look at our help and advice for van drivers, and once you have the information you need, get a business van insurance quote and save 10% when you book online.