Van Benefit in Kind 2026/27: What a Company Van Costs Drivers and Employers

What is van benefit in kind?

Van benefit in kind is a flat yearly tax charge that applies when an employer makes a van available to an employee for private use. The driver pays income tax on it and the employer pays Class 1A National Insurance. For 2026/27 it is £4,170, whatever the van is worth, unlike the company car charge.

It does not hit every van. Vans limited to business travel and ordinary commuting, vans with only insignificant private use, pool vans and zero-emission vans can all carry no charge.

Van benefit in kind rates for 2026/27

For the tax year 6 April 2026 to 5 April 2027, HMRC’s van benefit charge is £4,170, up £150 from £4,020 in 2025/26 (gov.uk). HMRC uprates it each April in line with the Consumer Price Index.

Employers also pay Class 1A National Insurance, which is 15% for 2026/27 (gov.uk), so where the charge applies, each van costs you £625.50 a year (£4,170 at 15%).

How to calculate van benefit in kind tax

The driver’s tax is the charge multiplied by their income tax rate. Where the charge applies, a 40% taxpayer in England, Wales or Northern Ireland pays £1,668 a year (£4,170 at 40%). At 20% it is £834 and at 45% it is £1,876.50. Scottish bands differ, and the van benefit calculator covers them.

HMRC allows a reduction if the van is unavailable for 30 days in a row, if it is shared (the charge is divided between the employees), or if the employee pays you for private use.

For the employer, 20 vans that attract the charge cost £12,510 a year in Class 1A. With the fuel charge below, it is £14,904.

Van fuel benefit charge 2026/27

The van fuel benefit charge is £798 for 2026/27 (£769 in 2025/26), reported on top of the van charge.

The trap is the fuel card. The charge can apply whether or not the fuel was used privately. It does not arise if the employee repays all their private fuel, and it is reduced if the van is unavailable for 30 days in a row or you stop providing fuel. A card with no private and business split is where this bites. Zero-emission vans carry no fuel charge, nor do vans meeting the restricted private use test below.

Electric vans and the van benefit charge

Zero-emission vans are currently nil rated. HMRC says to report them on the P11D at 0% of £4,170, which is £0, and the nil rate has applied since 6 April 2021.

Do not treat that as permanent. HMRC’s guidance gives no end date or phased increase, but the charge was 20% of the standard figure from 2015/16, rising to 80% by 2020/21. Check each April.

HMRC defines a zero-emission van as one that cannot in any circumstances emit CO2 by being driven. A van that attracts the charge costs the employer £625.50 a year, while a qualifying electric van is reported at £0.

What counts as private use, and when the charge does not apply

HMRC defines private use as any use other than the employee’s business travel, which includes commuting. Counting as private use is not the same as triggering the charge.

The van benefit charge is nil under HMRC’s restricted private use test, which needs all of these: the van is available mainly for business travel, its terms prohibit private use other than ordinary commuting, and any other private use is insignificant (ITEPA 2003 s155(1A), and HMRC’s guidance). So ordinary commuting alone does not trigger the charge, provided the terms and the reality both match.

HMRC says insignificant means too small or unimportant to be worth consideration. Taking rubbish to the tip once or twice a year, or a slight detour to a newsagent on the way to work, qualify. A weekly supermarket shop or a week’s holiday does not. HMRC sets no number of days, describing insignificant use as intermittent, irregular and very much the exception across the tax year as a whole.

Managing van benefit in kind: private use policies and records

The terms of use are part of the test, so a written private-use policy is how a nil charge works, not paperwork.

It has to hold in practice too. HMRC’s guidance on nil returns points to the terms of use and mileage records showing actual use. Your policy should say who has which van, what is permitted, how out-of-hours use and fuel cards are handled, and when it is reviewed. Those are suggestions, not HMRC requirements.

Name your permanent and temporary workplaces too. Ordinary commuting is the journey made most days between home and a permanent workplace, and travel to a temporary workplace is not.

Pool vans are different. HMRC’s pool van conditions are that more than one employee uses the van and each needs it for their job, none has it to the exclusion of others, it is not normally kept at or near anyone’s home, and it is used only for business journeys, bar limited private use that goes with one.

How journey records from fleet tracking can support a private-use policy

Journey records show when a van moved, how far and where, such as a Sunday trip in a van meant for business and commuting. Records support a documented policy and give you facts to work from. They do not remove the charge or replace HMRC’s tests. Tracking records are one way to keep mileage records of actual use, but HMRC has not said it accepts tracking data. Our fleet GPS tracking guide explains how tracking works.

The ICO sets the limits. You must tell workers and passengers about vehicle monitoring. Where workers may use a van privately, the ICO says it will rarely be possible to justify monitoring private use, and its example is tracking in working hours with a system the driver can switch off outside work. Monitoring driver behaviour needs a data protection impact assessment. The ICO marks this guidance as under review, so check the current version.

Reporting van benefit in kind on P11D

Where the charge applies, report it on a P11D for the employee and the Class 1A on a P11D(b). Both are due by 6 July after the tax year ends (6 July 2027 for 2026/27), and employees need a copy by then. Pay Class 1A by 22 July (19 July by cheque). A late P11D(b) costs £100 per 50 employees for each month or part month (gov.uk). HMRC has announced that from April 2027 mandatory payrolling will apply to vans and van fuel.

Frequently asked questions

Is there van benefit if I only commute in the van?

No charge, but only if all of HMRC’s restricted private use conditions are met: the van is available mainly for business travel, its terms prohibit private use other than ordinary commuting, and any other private use is insignificant.

Do electric vans pay van benefit in kind?

Zero-emission vans are currently nil rated, reported at £0, with no van fuel charge.

How much is van benefit in kind for 2026/27?

£4,170, plus £798 if fuel is provided.

What does the employer pay on a company van?

Where the charge applies, Class 1A at 15% is £625.50 per van, plus £119.70 if fuel is provided.

The charge turns on how each van is actually used, not on having a van. Work out which of yours attract it and confirm your position with HMRC or an accountant. Then run those vans through the free van benefit calculator.