🚐 Van Tax Rules from 2025

If you're a contractor or sole trader working for yourself, and you’ve bought a van through your business, there are important tax rules you need to understand. Used the right way, your van can be a valuable and tax-efficient business tool. Used the wrong way, it could land you with an unexpected tax bill.

✅ Use Your Van for Business Only to Stay Tax-Efficient

HMRC expects that your business van is used solely for business purposes. Driving to jobs, picking up tools, getting to suppliers — that’s all fine.

But if you start using the van for personal trips (weekends away, school runs, shopping), you’re crossing into “benefit in kind” territory — and that means you could be taxed as if it’s part of your salary.

🔍 What Counts as Personal Use?

Personal use means anything outside work, unless it’s just your normal commute (home to work site and back).

Here’s how it breaks down:

• ✅ Allowed (business use): Driving to client sites, picking up materials, commuting to work.

• ❌ Not allowed (private use): Family trips, dropping the kids off, going on holiday, errands.

If you avoid private use altogether, you won’t get hit with extra tax. That’s the simplest and most tax-efficient route.

💸 What Are the Tax Charges If You Use the Van Personally?

Van Benefit Charge (2025/26)

If HMRC sees your van as available for private use:

• Taxable value: £4,200

• Tax bill:

  • Basic rate (20%): £840 per year

  • Higher rate (40%): £1,680 per year

Fuel Benefit Charge

If your business also pays for fuel used for personal trips:

• Taxable value: £800

• Tax bill:

  • Basic rate: £160

  • Higher rate: £320

These charges apply even if you only use the van personally a few times a year — so it’s best to stay on the safe side.

⚡ Electric Vans? Even Better

If you’re using an electric van bought through your business, here’s the great news:

• No van benefit tax, even with private use.

• No fuel charge, even if your business covers charging.

That makes electric vans a tax-free perk, making them worth considering if you're due for an upgrade.

🔧 What This Means for Contractors Like You

• Stick to business use only — it’s the simplest way to avoid tax complications.

• Keep good records of how you use your van (mileage logs or expense tracking apps).

• Don’t assume “I own the business, so it’s fine” — HMRC rules still apply even if you’re self-employed or a one-man limited company.

• If you do use the van personally, be prepared for the tax implications — or consult your accountant about alternative options.

💬 Final Tip

If you want to claim the cost of your van through the business — make sure it’s genuinely a business asset.
Avoid personal use and keep it clean from a tax point of view.

Not sure if your setup is right? Speak to your accountant — they’ll help you get it right and avoid HMRC problems later on.