From 2007, the tax liability for private use will rocket from £500 to £3,000, equivalent to the benefit-in-kind tax on a lower-medium hatchback.
Employers will need extensive record keeping to avoid the tax, or ensure employees understand how much the tax changes could cost them, members of the London West region of ACFO, the fleet operators association, heard.
However, members heard that private use was not simply a benefit for van drivers, it was also a risk for a company’s brand.
Members were told: ‘For branded fleet vehicles, there is a concern about the impact on a company’s image when, for example, vehicles are being used to take families to the beach, with loads of kids piling out of the back of a company’s van.’
To help prepare, this year the whole definition of private use was changed so that the majority of employees whose private use is ‘insignificant’ pay no tax at all.
However, examples of private use which will attract taxation include use of the van to do shopping at a local supermarket on a regular basis, taking the van on holiday or use outside of work for ‘social activities’.