When an employee is provided with a vehicle to use for business and private journeys, the taxable benefit will vary enormously where vehicle is classified as a goods vehicle (a van) as opposed to non-goods vehicle – i.e. a car.
In 2011/12 and 2016/17 Coca-Cola provided its employees with the following vehicles and fuel:
- VW Transporter T5 Kombi van- second generation (Kombi 2);
- VW Kombi Transporter T5 – first generation (Kombi 1);
- Vauxhall Vivaro.
The company asserted that these vehicles were commercial vehicles, and thus the taxable benefit for 2016/17 would be £3,170 for each driver. Fuel was also provided for private journeys, which if those trips consisted of more than normal commuting, the additional taxable benefit would be £598 per year.
If the vehicles were categorised as cars, the driver would be taxed on a percentage of its list price (say £20,000), depending on the vehicle ‘s CO2 emissions (say 153g/km). Where the vehicle had a diesel engine the taxable benefit would be: 30% x 20,000 = £6,000. The fuel benefit would be 30% x £22,200 = £6,660.
ITEPA 2005, s 115 defines a van as: a goods vehicle with a design weight not exceeding 3,500kg. The vehicles in this case were designed to carry a payload of 1000kg, but they also had a second row of seats for passengers.
There was a large amount of expert evidence given in the FTT case as to whether the vehicles were primarily designed to carry goods or passengers. The judge decided that the Vivaro was a goods vehicle for the purposes of ITEPA 2005, s115(2), but the VW Kombi vans were not primarily designed to carry goods, so were technically cars.
This case shows that just because a vehicle looks like a van, it is not necessarily a van for income tax purposes. As the tax differential is so large, it is worth checking the specifications of the vehicle in some detail.