Navigating the world of van tax can be confusing, frustrating, and time-consuming. But we’re here to help you make sense of it all. In this comprehensive guide, we’ll take you through the ins and outs of van tax, from understanding Vehicle Excise Duty (VED) to exploring the benefits of electric vans, the intricacies of van classification, and much more.
By the end of this journey, you’ll have a solid grasp of what van tax is, how it works, and how to make the most of any tax benefits and exemptions that apply to you.
So let’s dive in and start unravelling the mysteries of van tax with our handy guide.
Vehicle Excise Duty (VED), often referred to as road tax, is an annual levy imposed on nearly all vehicles driven or kept on public roads in the UK. This tax helps in maintaining the proper functioning of the UK’s roads.
Van tax is calculated differently than car tax, with a flat road tax rate for light commercial vehicles (LCVs) in the 2022/2023 tax year being £290. To determine which tax band your van falls under, you’ll need to check its first registration date and engine size.
The detection and enforcement of vehicle tax are facilitated through ANPR (Automatic Number Plate Recognition) camera technology. It is prohibited to drive an untaxed vehicle on a public road, so ensuring you’re up-to-date with your van tax payments is essential.
Understanding how the HMRC classifies vans is crucial when it comes to tax implications. Vans are generally classified into three categories: light commercial vehicles, double cab vans, and pickup trucks.
Each category has its own tax classification and requirements, so it’s essential to know which category your van falls under to ensure you’re paying the correct tax and taking advantage of any potential tax benefits. For light commercial vehicles, the HMRC classifies them as a ‘goods vehicle’.
Light commercial vehicles (LCVs), also known as “light goods vehicles”, such as the Transit Courier, are intended for business operations and designed to transport goods or passengers. These vehicles have a gross vehicle weight of up to 3,500kg (3.5 tonnes). The tax for light commercial vehicles is determined by the van’s weight and the maximum load it can safely transport.
Double cab vans, such as the Ford Tourneo Custom, are vehicles featuring rear passenger seating and windows. These vans have a distinct tax classification and may be subject to car road tax regulations if they are primarily intended for transporting passengers, not goods.
To determine whether your double-cab van should be taxed as a van or a car, consult your V5C registration document. If the vehicle is classified as N1 or N2, it should be taxed as a van. If it falls into the M1 or M2 categories, it should be taxed as a car.
Pickup trucks are subject to the same tax rules as vans, with a flat fee of £290 for tax in 2022 and 2023. However, there's a potential issue with 4x4 pickups such as the Ford Ranger as a heavy load compartment cover is considered part of the base vehicle (not payload).
This could result in the truck having a payload of under 1 tonne, which would have taxation implications. To qualify as a commercial vehicle, your pickup truck must have a payload of over 1 tonne.
Electric and hybrid vans offer a range of tax incentives that can make them an attractive option for van drivers. For example, during the 2020/2021 tax year, there was zero tax on Benefit in Kind (BIK) for hybrid vehicles with emissions from 1-50g/km and a pure electric range of over 130 miles. Additionally, businesses that purchase vans with zero CO2 emissions are eligible for a 100% First-Year Allowance (FYA) until April 2025, provided they do not claim the FYA.
While fully electric vans producing 0g/km of CO2 are exempt from road tax, hybrid and plug-in hybrid van owners must pay the same VED as those who drive petrol and diesel vans. It’s essential to consider these tax implications when choosing between electric, hybrid, and traditional fuel vans to ensure you make the most informed decision for your needs.
One of the most significant advantages of electric vans is that they are currently exempt from road tax, BIK (benefits in kind), and fuel benefit charges. This makes them an attractive option for van drivers looking to save money on taxes while also being more environmentally friendly. However, it’s essential to note that electric vans are still required to apply for road tax, even though there is no cost associated with it. This ensures that all vehicles are accounted for and compliant with the law.
The savings on road tax, BIK, and fuel benefit charges can make a significant difference, especially for those who rely on their vans for daily business operations and still need to pay tax.
If you’re considering making the switch to an electric van, why not consider the Ford E-Transit? This environmentally friendly option offers the benefits of a zero-emission vehicle without sacrificing the performance and practicality you need from a commercial vehicle.
Although it may be more costly than conventional vans and require more frequent charging, the tax savings and overall positive impact on the environment make it a worthwhile consideration for many van drivers.
At the Foray Motor Group, we currently have an excellent and unique offer on theFord E-Transit. When purchasing this vehicle, customers will enjoy a £3,000 saving, 0% APR, a free Wallbox, and 5 years free servicing.
Some van tax exemptions may apply to certain drivers or vehicles. These include exemptions for disabled drivers and vehicles over 40 years old. To obtain van tax exemptions, you’ll need to submit an application to the appropriate tax authority which can help you save money on van tax and ensure you’re taking advantage of any available benefits.
Calculating company van tax may seem daunting, but with the right information, it becomes manageable. As mentioned earlier, van tax is determined based on the registration date, engine size, and Euro 4/5 compliance. If your van is Euro 4/5 compliant, you may qualify for a reduced tax rate.
Benefit-in-Kind (BIK) tax is a yearly van fuel benefit charge that may be applicable if your employer provides you with a van for work. BIK tax is calculated by multiplying the BIK value by the driver’s relevant income tax band. It’s important to note that BIK tax is applicable when you use your work van for non-work purposes, such as taking the kids to school or running errands.
If you’re looking to reduce your BIK tax liability, you might consider sharing the company van with other colleagues, paying your employer for its use, or not using it for at least 30 consecutive days.
Paying your van tax, including the company van tax, is a straightforward process, and there are multiple methods available. You can pay vehicle tax through the government’s online service, which requires either your renewal letter or V5C for an existing vehicle, or the 11-digit reference number from the green ‘new keeper slip’ provided by the previous owner for a new car or van.
Alternatively, you can pay your van tax by phone by contacting the Driver and Vehicle Licensing Agency (DVLA) on 0300 123 4321 or at the Post Office.
To pay at the Post Office, you’ll need one of the following official documents: V5C, V62 form, or proof of insurance (for Northern Ireland addresses). Monthly payment by direct debit is another convenient option.
Cancelling your van tax may be necessary if you no longer have the vehicle or if it’s off the road. When you cancel it, you may be eligible for a refund on any payment made beyond the date of cancellation, such as the remainder of a Direct Debit or the rest of a six- or 12-month term. The refund process may take up to eight weeks, depending on the payment method.
To cancel your van tax, you’ll need to inform the DVLA that you no longer have the vehicle or that it’s off the road (SORN). You can register your van off-road online with either your V5C logbook or V11 vehicle tax reminder letter. Once the DVLA receives this information, they will calculate a refund for any remaining months from the date they receive the information.
Not paying your van tax can result in severe consequences, including fines, clamping, impounding, and potential legal proceedings. If you do not pay van tax or declare that your van is off the road (SORN), you may be subject to a fine of up to £1,000. Additionally, if you are found driving without van tax, you could incur a fine of up to £1,000. To avoid penalties, ensure you’re up-to-date with your van tax payments and keep the DVLA informed.
Staying informed and proactive about your van tax obligations can help you save money, avoid penalties, and ensure you’re driving legally on the road.
If you’re interested in making tax savings as well as reducing emissions and enjoying the benefits of cheaper running costs, why not consider a Ford E-Transit as your next vehicle? We have an excellent offer on the electric version of the UK’s most popular van, which includes a £3000 discount, free home wallbox and 0% APR on 3-year Ford finance plans.
We also have a full range of new Ford vans for sale, so you can find the perfect commercial vehicle for your needs.