Company van tax 2026/27: the van benefit and van fuel charges

Company vans are taxed very differently from company cars. There is no list price and no CO2 table: if an employee can use the van privately, the taxable benefit is a flat £4,170 for 2026–27, plus a flat £798 if the employer pays for private fuel. And a van used only for work and the commute is not taxed at all. This page quotes the sections of the Income Tax (Earnings and Pensions) Act 2003 that set those figures, the HMRC guidance on when the charge is nil, and the change for double cab pickups that took effect in April 2025.

What counts as a van

The test is the vehicle’s construction, not how a particular employee happens to use it: a vehicle built primarily to carry goods is a goods vehicle even if it is mostly used for commuting. Because a goods vehicle cannot be a “car” under the same section, and a “van” stops at a design weight of 3,500 kg, heavier goods vehicles fall outside both sets of charges.

Eight van situations and the 2026/27 charge

When the van benefit is nil

Business use only, or a pool van

GOV.UK: “You do not have to report or pay anything to HM Revenue and Customs (HMRC) if your van is only used for business journeys or as a pool van.” For a pool van, the conditions are that it is available to and used by more than one employee, is available because they need it for their job, is not ordinarily used by one employee to the exclusion of others, is not normally kept at or near employees’ homes, and is used only for business journeys. On the last point, “limited private use is allowed, but only if it’s incidental to a business journey, for example driving home to allow an early start the next morning”.

Home-to-work use: the restricted private use condition

Taking a van home does not by itself trigger the charge. Section 155(1A): “If the restricted private use condition is met in relation to the van for the tax year, the cash equivalent is nil.” The condition has two parts. The commuter use requirement is met where “the terms on which the van is available to the employee at the time prohibit its private use otherwise than for the purposes of ordinary commuting or travel between two places that is for practical purposes substantially ordinary commuting”, and nobody in the household uses it privately for anything else. And “The business travel requirement is satisfied at a time if the van is available to the employee at the time mainly for use for the purposes of the employee’s business travel (see section 171(1)).”

In practice the van must be provided mainly for work, and the employment terms must prohibit private use other than commuting. A written van policy that says so is the employer’s evidence.

Insignificant private use

GOV.UK: “Vans used for ‘insignificant’ private journeys are exempt, for example making a slight detour to pick up a newspaper on the way to work.” HMRC’s Employment Income Manual sets the bar. Private use is insignificant if it is, among other things, “insignificant in quantity in the tax year as a whole (i.e. a few days at most)” and “insignificant in quality (e.g. a week’s exclusive private use is clearly not insignificant)”. GOV.UK’s newspaper detour sits at the insignificant end.

Electric vans

Section 155(1B)(aa): “if the van cannot in any circumstances emit CO2 by being driven and the tax year is 2021-22 or a subsequent tax year, the cash equivalent is nil”. GOV.UK: “You need to report the zero emission van on the P11D at 0% of £4,170 which is £0.”

The 2026/27 figures, and where they come from

Where private use is more than insignificant, s.155(1B)(b) applies: “in any other case, the cash equivalent is £4,170.” The fuel charge is in s.161: “where the tax year is a later tax year, £798.” Both figures were set by statutory instrument after HMRC’s December 2025 notice, which said the charges would rise “based on the September 2025 Consumer Price Index figure.” and that “The flat rate charge for the van fuel benefit will increase to £798 for tax year 2026 to 2027.” The previous year’s order had set the “van benefit at £4,020”.

Rates are the England, Wales and Northern Ireland bands; Scottish taxpayers apply the Scottish rates to the same figures. The employer pays Class 1A at 15%: £625.50 for the van and £119.70 more for fuel. Both are reported on the P11D: GOV.UK says to “report the cost on form P11D” and “pay Class 1A National Insurance on the value of the benefit”.

Reducing the charge

• Unavailability: both charges reduce where “your employee cannot use the van for 30 days in a row”.
• Sharing: “other employees use the van - divide £4,170 by the number of employees”.
• Payments for private use reduce the van benefit.
• Fuel: the £798 falls away entirely if “your employee pays you back for all their private fuel” — a record of private journeys is what lets an employer show that.

Salary sacrifice

“You do have to report vans or fuel if they’re part of a salary sacrifice arrangement.” and “If the cost of vans and fuel is less than the amount of salary given up, report the salary amount instead.” The general rules are on salary sacrifice car schemes.

Cars against vans: the fuel benefit

Vans pay a flat fuel charge; cars do not. For a car, s.150: “The cash equivalent of the benefit of the fuel is the appropriate percentage of £29,200.” The appropriate percentage is the car’s own BIK percentage, so a car at 30% carries a fuel benefit of £8,760 if private fuel is provided, against £798 for a van. Where private fuel is provided, whether a vehicle is a car or a van can matter more for the fuel charge than for the vehicle itself. The car percentages are on company car tax (BIK) rates.

Double cab pickups since April 2025

Until 5 April 2025 HMRC followed the VAT approach, under which a double cab pickup with a payload of a tonne or more was a van. That ended on 6 April 2025. EIM23151: “From 6 April 2025, HMRC will no longer align its interpretation of the terms “car” and “van” for tax purposes with the definitions used for VAT purposes.” Applying the Court of Appeal’s reading of the ‘primary suitability’ test, HMRC concludes that “from 6 April 2025 most double cab pickups are expected to be classified as cars when calculating the benefit charge. This is because typically these vehicles are equally suited to convey passengers and goods”.

• Transitional rule: for a pickup purchased, leased or ordered before 6 April 2025, employers “they will be able to rely upon the previous treatment until the earlier of disposal, lease expiry, or 5 April 2029.”
• VAT is unaffected: “The VAT input tax position remains unchanged as outlined at VIT56600.” The payload test still applies to input tax.
• The test is per vehicle. HMRC’s word is “most”, not “all”; a pickup whose construction is primarily suited to goods can still be a van.

A van policy in six lines

• State that the van is provided mainly for business travel.
• Prohibit private use other than commuting and insignificant detours, or accept the £4,170 charge.
• Say whether private fuel is provided; if it is repaid, require a log.
• Record who uses pool vans and where they are kept overnight.
• Check pickups against the April 2025 rules before ordering.
• Apply the same driver and vehicle checks as for grey fleet — the health and safety duty does not depend on who owns the vehicle.

This page quotes legislation and HMRC guidance as read on 2026-10-02; it is not tax advice for a particular vehicle.

Common questions