- Guide to LCV taxation, including 2019/2020 tax rates
- Find out about road tax (VED) and benefit-in-kind (BIK)
- Exemptions, reductions, business and private use explained
Now fully updated with information about 2019/2020 van and pickup tax costs, which apply from April 2019
The taxation system for vans and pickups – and their drivers – is different to that for cars. In some areas this makes it much more straightforward, in others it's a little more complex.
This guide will help you understand the current rules and rates in the 2019/2020 tax year.
So whether you’re trying to find out more about road tax (VED), benefit-in-kind (BIK) or the difference between business and private use, this is the place to start.
The details below apply to all light commercial vehicles (LCVs) with a maximum gross vehicle weight – also known as the revenue weight – of up to 3,500kg.
There is a lot of information here, so we've included these handy links to make it easy to jump to the section that's most important to you:
- Road tax (VED) rates for new vans and pickups
- Road tax (VED) rates for older vans and pickups
- Are any vans taxed the same way as cars?
- Van and pickup benefit-in-kind (BIK) rates
- The difference between business and private van use
- Van Fuel Benefit Charge
- The grey areas
- Electric van tax
- Pickup truck tax - further details
- Van tax exceptions and exemptions
Or, simply keep reading for the full Parkers' guide to van and pickup tax.
Road tax – officially known as Vehicle Excise Duty or VED – is the fee you must pay in order to legally drive your van on public roads.
The amount of road tax you pay for a car is partially determined by its CO2 emissions – the more it pollutes, the more you pay. However, with a light commercial vehicle (LCV) such as a van or pickup, road tax is charged at a flat rate, that varies only with the vehicle’s age.
There is a proposal to move to an emissions-based system, incentivising more environmentally friendly vehicles over the more polluting ones, but this isn't due until 2021 at the earliest (although anyone who drives into London will have noticed that some cities are already taking this into their own hands by introducing ultra-low emissions zones).
For now, though the standard 2019/2020 van road tax rate is £260 for 12 months, or £143 for six months - if paid in the conventional manner. This applies to petrol and diesel vans.
However, the DVLA also offers a Direct Debit facility. A single payment for the whole 12 months costs the same as above (£260), while a Direct Debit payment for six months is slightly cheaper at £136.50.
Spread the cost over 12 invidual monthly Direct Debit payments and you'll pay a slightly higher total of £273. Which you may well feel is worth it for the convenience.
These rates apply to all vans built after 1 March 2001 that fall under the TC39 VED tax code.
However, there is a different rate for vans that fall into specific periods of Euro 4 and Euro 5 emissions regulation, which have a TC36 VED code, as well as a different rate for vans built before 1 March 2001.
Older vans are taxed in a slightly different manner, with specific rates for certain periods of the Euro 4 and Euro 5 emissions standards.
This sounds complicated, but it simply means that if you have a Euro 4 van registered between 1 March 2003 and 31 December 2006 or a Euro 5 van registered between 1 January 2009 and 31 December 2010 you will pay £140 for 12 months or £77 for six months, again with a choice of single or monthly Direct Debit options.
There is no change in this rate versus the 2017/2018 and 2018/2019 amounts.
At the moment there is no similar amendments for Euro 6 emissions, but in March 2018, the UK chancellor Philip Hammond announced plans for a consulation on lowering the cost of tax for the cleanest new light commercial vehicles, and confirmed that there are plans to bring in 'environmental incentives' from April 2021. Click here to read more.
These incentives'won't necessarily making it cheaper to tax new vans, they might instead make it more expensive to tax older ones. Euro 4 and Euro 5 vehicles are already being penalised by ultra-low emissions zones, and are only likely to get more expensive to run as time passes.
If your van was built before March 2001, you’ll pay a different rate again, depending on the size of its engine. This is one area where cars and vans are taxed the same way.
For engine sizes up to 1,549cc (that's just over 1.5-litres) the rate is £160 for 12 months, £88 for six months; for engine sizes above 1,549cc it’s £265 for 12 months, £145.75 for six months.
Direct Debit is once again available, costing the same for a single 12-month payment, £84 or £139,13 for six monthly payments, and £168 or £278.25 in total if you want to pay per month.
Benefit-in-kind is taxation levied against any perks (benefits) you receive from your employer in addition to your salary – including access to vehicles, which means it generally tends to be referred to as company car tax, as vehicles are usually the highest of these expenses.
However, while BIK varies for cars it is set at a flat rate for vans and qualifying pickups. In 2019/2020 that amount stands at £3,430.
This means an annual tax bill of £686 for employees at the 20% income tax level (that’s about £57.17 a month), while those in the 40% band will be charged £1,372 a year (which is around £114.34 a month).
This is considerably cheaper than most cars.
What's more, benefit-in-kind only applies if the van is used for private journeys. Vans that are exclusively limited to business journeys are not subject to BIK tax.
According to HM Revenue and Customs – HMRC, the government tax collection agency that deals with benefit-in-kind – you won’t have to pay anything if the van is used for business journeys only, or if it's a pool van rather than one linked to a particular employee.
A business journey is officially defined as a trip that is 'made as part of work (eg a service engineer travelling between appointments)' or one 'to a temporary work place'.
A pool van is a van that’s available for use by more than one employee, provided because it’s necessary for the job, and not kept at or near an employee’s home.
However, 'insignificant' private journeys are also allowed within these rules – such as making a 'slight detour' to buy a newspaper on the way to work, or taking a pool van home for the night if you need to make an early start in the morning.
If you use a work van for private journeys and your employer pays for the fuel, you’re also subject to tax on that benefit. The 2019/2020 Van Fuel Benefit Charge rate is £655 a year – but that's the benefit value, so you'll be taxed on 20% or 40% of that figure, rather than be forced to pay the whole amount.
This works out at £131 for 20% payers and £262 for 40% payers, around £10.92 and £21.84 per month.
How much you have to pay is further reduced if you can’t use the van for more than 30 days in a row, the fuel provision is withdrawn during the year, or if you reimburse your employer for the cost of the private-use fuel.
As you can probably tell, there are plenty of grey areas here.
For example, the benefit-in-kind charge can be reduced if the van isn’t available for 30 days in a row, or if you pay your employer for your private use of the van. In instances where more than one employee has access to the van for private use, the benefit-in-kind value can be divided between them.
There are also exemptions to the private-use rule – one-off trips to the dump, for example. Take your work van or pickup on holiday, though, and you should expect to be taxed on it.
If you want to avoid unnecessary tax it is important that employer and employee keep records proving how and when the van was used – or not used – and whenever the cost of private-use fuel was reimbursed.
As an incentive to encourage businesses to switch to electric vans with zero emissions, tax on electric vans is cheaper than it is for regular vans.
This process starts with annual road tax (VED), which is £0. Yes, it's literally nothing.
The Van Fuel Benefit Charge on zero emissions vans is also zero (£0) as, to quote the goverment's official documentation, 'electricity is not a fuel'.
Benefit-in-kind value on electric vans is cheaper, too.
For 2017/2018 the electric van BIK value was just 20% of the regular rate, in 2018/2019 it rose to 40% - and now in 2019/2020 it's risen to 60%. This is all part of the goverment's plan to bring it into line with regular petrol and diesel vans in 2022.
This means that in 2019/2020 the BIK rate for electric vans is £2,058 (60% of £3,430).
Substantially more than it was the previous year, but still a big saving over a conventional van - make the most of it while you can.
Any pickup truck that is classed as a light commercial vehicle is subject to the same flat rate tax rates as a van; hence the rising number of 'lifestyle' pickup sales in recent years, as their financial appeal has encouraged some drivers to choose them instead of a conventional company car or SUV.
Double-cab pickups are particularly attractive for these purposes, as they have two rows of seats and four doors, making them as useful for carrying people as a regular car. However, to qualify as an LCV, a double-cab pickup must have a payload capacity of over 1,000kg.
Find out more about the pros and cons of picking a pickup as a company car by clicking here.
There is some confusion about dual-purpose, car-derived vans (including the Fiesta Van below) and vans with additional rows of seats, such as double cab and kombi models - and indeed pickup trucks.
To be absolutely sure a vehicle qualifies as a light commercial in the government's eyes you can check the V5C logbook for something called the European classification. If this says N1 or N2 it will be taxed as a van; if it says M1 (or M2 for minibuses) it will be taxed as a car.