HMRC has confirmed that tax charges for company car van drivers have increased as of April – with the charge now standing at £4,170 for the entire tax year.
When employees use company vehicles privately (such as for personal use outside work as well as during work hours), it is counted as a ‘Benefit in Kind (BiK) and is taxed by HMRC.
For cars, there is a sum which involves multiplying the value of the car by a percentage, but for vans it’s a much simpler fixed rate.
The RAC explains: “If your employer provides you with a company car, you’ll pay a tax known as Benefit-in-Kind (BiK). This tax is applied to the personal use of the vehicle, which includes commuting, and is calculated based on the car’s CO2 emissions, its P11D value, and your income tax band.
“This tax ensures that the personal benefit of having a company car is taxed like part of your salary. Understanding the key factors that influence how much tax you’ll pay will help you budget and choose the most tax-efficient vehicle.
“Benefit in Kind (BiK) refers to any perk or benefit you receive from your employer that is not part of your salary, such as a company car. The Government applies tax to this benefit based on the vehicle’s emissions and value, ensuring that the benefit is taxed as part of your overall income.”
For 2026-2027, the BiK for vans has been increased in line with inflation, from £4,020 to £4,170.
Rustrick Accountants explains: “If you provide employees with a company van (or fuel for private use) the benefit-in-kind charges are going up again next tax year.
“It’s worth noting that the van charges are fixed flat rates, while company car fuel uses a multiplier system.
“So, if employees use company vans privately, or receive employer-paid fuel for private journeys, the taxable benefit will be slightly higher in 2026/27”