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Small traders who drive vans have come under increasing pressure from HMRC following a change to rules on a job perk, according to UHY Hacker Young.
The accountancy group has obtained figures that show the amount of tax paid by drivers of company vans quadrupled in the two most recently completed tax years. The Revenue collected £40 million over the period, compared to the £10 million taken by the department in 2006/07.
The rise follows a change to the system for taxing employees’ private use of employer-provided vans. Under the old rules, the taxable benefit in kind was £500 (or £350 for vehicles that were more than four years old). Following changes introduced in April 2007, the taxable benefit for all vans is £3,000 plus an additional £500 of taxable benefit if fuel is provided by the employer.
‘This tax increase has had a huge impact on small businesses, many of whom have been struggling with rising costs during the recession,’ said Roy Maugham, tax partner at UHY Hacker Young.
‘Small traders often economise on transport costs by using their business vans extensively for private use.’
Mr Maugham added: ‘Businesses have had to review their policy as to who should receive vans and whether these should be restricted to just business use, but in practice the tax rise has proved very difficult to avoid.
‘HMRC are not giving drivers much leeway about what constitutes permissible private use of a van. It is very difficult for employees who are allowed to take vans home to avoid this tax charge. Using the van to pick up the kids at the weekend will almost certainly result in the van being taxed as a benefit.’
