Van tax worries mount ahead of April deadline
21 February 2007
The benefit-in-kind tax changes for light commercial vehicles are now looming large, with 6 April being the date the new regulations come into force.
After then, drivers with access to commercial vehicles for private use will find a six-fold increase in their liability, with the Chancellor closing the perceived loophole company drivers have been crashing their pick-up trucks through for a number of years.
As of 6 April, the flat rate of tax rises from its current £500 to £3000, with an extra £500 if the driver gets fuel as well.
"The new laws could be quite a big problem," said Harvey Perkins of accountants KPMG. "It's been public knowledge for quite a long time but employers and employees have ignored it because there was no immediate impact." That's meant the deadline has crept up on many companies.
The good news is that the laws don't effect drivers taking vans or pick-ups home from work, parking them and then driving back to work the next day. Neither do they hit drivers making occasional trips, such stopping for a paper on the way to work or taking rubbish to the tip.
Perkins said finance and fleet departments should be ready for an avalanche of enquiries. "It might crystallise when next year's tax coding notices are sent out in the coming weeks or when van drivers realise their pay has fallen," said Perkins, who also argues that the new rate isn't enough to deter drivers selecting pick-ups for tax reasons.
With the latest driver-friendly pick-ups such as the Nissan Navara and Mitsubishi L200 more car-like than ever before, Mitsubishi says it doesn't expect to see a big drop-off, claiming the tax payable for an L200 driver with free fuel in the 40% banding will rise from £200 to £1400, compared with £3953 for a Mondeo 2.0 TDCi Ghia X estate.