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New - Company Van Tax Rules

Companies operating van fleets are facing changes to the taxation laws relating to the private use of company vans.

For employees who use company vans for private journeys, the Benefit In Kind (BIK) value is currently set at £500 per year, however from April 2007, this value will increase from £500 to £3000 (or £3500 where fuel is provided).

How will it impact employees and employers?

The impact of this taxation change will have a significant effect on both employees and employers.

Your employees will have to pay their marginal tax rate on this increased BIK figure and as employers, you will be required to pay 12.8% National Insurance on the BIK value.

For example:
12.8% of £3000.00 = £384 per annum (equivalent to £32 per month).
12.8% of £3500.00 = £448 per annum (equivalent to £37.33 per month)

Multiply this over your entire workforce and ask yourself how this will affect your bottom line.

Act now!

Companies are being urged to prepare for these changes and encouraged to start planning now!

With other factors to consider, such as employees potentially asking for increased salaries to compensate this new tax, issues with increased storage space for vans over night, increased theft risk and therefore increased insurance premiums – could your business afford to ignore the changes?

Businesses must be able to provide the Inland Revenue with evidence that the tax does not have to be paid, and the only way to do this is by producing accurate mileage and vehicle usage reports.

How can V-SOL Vehicle Tracking help?

V-SOL offers a reporting function that allows businesses to track the usage of company vehicles including when, where and how vehicles are being driven.

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