Benefits in kind legislation - Is it a car or a van?


Chris Campbell

Chris Campbell

Tax Senior Manager

13 October 2017


    The benefits in kind legislation concerning company car and van benefits has come under the spotlight following the First-tier tax tribunal case of HMRC v Coca-Cola (GB) Limited. 

    This case looked at the tax treatment of the Volkswagen Transporter Kombi and the Vauxhall Vivaro for benefit in kind purposes and the outcome could potentially have a bearing on the treatment of many different vehicles and it is expected that HMRC will clarify its guidance to employers following the judgement. 

    Whether a vehicle is a car or a van can impact on the tax liability significantly. This is because the benefit in kind on a company car and private fuel is linked to the vehicle’s list price and C02 emissions, whereas a fixed *£3,230 benefit applies for the provision of a company van and a fixed *£610 benefit applies for the provision of fuel for a company van.  In addition, whilst travel from home to a permanently place of work is classed as private use for a company car, ordinary commuting is not classed as private use in the case of a company van. *(Rates applying to 2017/18 tax year)

    A higher benefit in kind not only increases the tax exposure for the employee, it also affects the Class 1A National Insurance liability payable by the employer (13.8% of the taxable benefit in kind) after the end of the tax year.

    The tribunal found that that the Volkswagen Transporter Kombi models should be treated as company cars whereas it was content with the treatment of the Vauxhall Vivaro as vans due to the level of storage space.

    It is expected that there will be further developments on this case, so it is very much a case of watching this space!