White Van Man/Woman (and 4 Cab Man)

by Ian Williams FCA TEP
Campbell Dallas Chartered Accountants

The ubiquitous “White Van Man” (WVM), you know the one who passes you at 90MPH whilst on the phone and eating a sandwich at the same time! Gordon, has caught-up with him/her, not via Tayside Police enforcement, but via HMRC (the new Revenue) with a series of harsh hitting tax charges, charged as “Benefits in Kind” (BIK).

From 6 April 2007, WVM is subject to some hefty tax charges for the private use of the van. The charge is difficult to avoid and if you do not volunteer to HMRC that you or your employee is a WVM, believing you can speed one tyre’s width ahead of the law and they catch you, then there are penalties to boot (or via the van’s rear doors, at least!).

Up to 5 April 2007, HMRC charged a flat rate of £500 for private use of the van plus the fuel which, when converted to tax payable, did not hurt too much, however, the new regime introduces a flat rate “scale charge” of £3,000 where there is “unrestricted” private use. If you have such unrestricted private use, and fuel is supplied there is an additional taxable benefit of £500, resulting in £3,500 being added to WVM’s taxable income.

In cash terms, therefore, the tax cost has moved from a modest £110 per annum to £770 per annum for a basic rate taxpayer and from £200 to £1,400 for a higher rate taxpayer. There is also a Class 1A National Insurance charge levied at 12.8% which is payable by the employer at a cost of £448. This will not be popular and I can imagine an army (fleet) of WVM’s marching/(driving) to their employers, demanding compensation for this additional hurt imposed by Gordon.

There are legal means of avoiding such a charge on WVM which, if property documented, relieve some or all of the burden and which, indirectly, might save you, as employer, a lot of cash and less grief.

Also, by way of a post-script, HMRC accept that a double cab pick-up, with a payload of 1,000kg or more is a “van”. If, however, the payload area is covered, for security purposes, with a hard top, this will restrict payload capacity. Hard tops have a deemed weight of 45kg. For example, if the original payload was say 1,015kg, after fitting the hard top the payload drops to 970kgs, which turns the pick-up into a “car”, at a stroke, giving very hefty BIK problems, making even WVM pale into insignificance.

By the way, painting the van GREY, is not one of the legitimate avoidance solutions!

Happy motoring.