If your company provides you or your staff with a van, the tax on it this year is a flat £4,170, whatever the vehicle cost. That is one of the better deals in the tax system. The problem is that the vehicle many trades actually want, the double cab pickup, mostly stopped being treated as a van in April 2025 and is now taxed as a car. On a typical pickup that difference runs into thousands a year.
None of this is a reason to panic about a vehicle you already own, because the protection for existing pickups is wide. It matters when you are about to buy, or when a lease is up for renewal, which is exactly when most people have not asked the question. Here is how it works.
In a nutshell
- This is about employees and directors. Sole traders work to different rules entirely.
- A van costs a flat £4,170 in benefit. Regardless of what the van cost you.
- Commuting home need not be a benefit. But two conditions must both be met.
- Most double cab pickups are now cars. The one tonne payload test is gone for this purpose.
- Two transitional rules get confused. One runs to 2029, the other closed in 2025.
- Ask before you sign, not after. The choice is easy to get wrong and hard to undo.
1. Who this applies to and who it does not
Start here, because many readers will otherwise apply the wrong rule to themselves. The van benefit charge applies to employees and directors who get a vehicle from their employer. If you run a limited company and it provides you with a van, that is you.
If you are a sole trader or a partner, it is not. You cannot receive a benefit in kind from your own business, because you and the business are the same person for tax. Instead you claim running costs and capital allowances, and adjust for private use. The figures below do not apply to you.
One part does still matter to sole traders: the capital allowances treatment in section five. If a pickup counts as a car, the allowances change, and that applies whichever way you trade.
2. What a company van costs in 2026 to 27
For a van available for private use, the benefit in kind is a flat £4,170 for 2026/27, up from £4,020. It does not scale with the price of the van, which is why vans are treated so much more kindly than cars.
What that means in real money:
- A basic rate employee pays 20% of £4,170, which is £834 a year.
- A higher rate employee pays 40%, which is £1,668.
- The employer pays Class 1A National Insurance at 15%, which is £625.50.
If the employer also pays for private fuel, add the van fuel benefit of £798 for the year. That takes the higher rate employee to about £1,987 and the employer's Class 1A to £745.20.
Two useful reliefs: a zero-emission van has a nil benefit charge, and the charge is reduced if the van is genuinely unavailable for 30 consecutive days or more, if the employee reimburses the private use, or if the van is shared between employees.
3. When driving the van home is not a benefit
This is the question clients ask most, and the answer is more precise than people assume. Ordinary commuting in a van does not create a benefit charge, but only if both of these are true:
- The terms on which the van is provided prohibit private use beyond ordinary commuting, and
- Neither the employee nor their household actually makes any other private use, beyond something insignificant.
Both limbs matter. A director with an unrestricted van and nothing in writing is exposed even if the mileage happens to look clean. If your company provides vans, a short written van policy is worth having.
On what counts as insignificant, HMRC gives its own examples. Taking rubbish to the tip once or twice a year, a slight detour to drop a child at school, or calling at the dentist on the way home are all fine. Doing the weekly supermarket shop in it, taking it away on holiday, or using it for social trips are not.
4. Why most double cab pickups are now taxed as cars
Until April 2025, a double cab pickup with a payload of one tonne or more was treated as a van for benefit in kind. That shortcut is gone. From 6 April 2025, classification goes back to the statutory test of what the vehicle is primarily suited to carry, and HMRC expects most, if not all, double cab pickups to be cars for benefit purposes.
The gap is large, because a car benefit is a percentage of list price rather than a flat figure. The maximum appropriate percentage for 2026/27 is 37%, which is where almost every diesel pickup lands on emissions alone.
Two things worth knowing. Single cab pickups, with one row of seats, are normally still accepted as vans, so they remain a genuine option. And the one tonne payload test still applies for VAT, which is unchanged.
5. The two transitional rules people confuse
This is where reporting gets muddled. There are two separate transitional rules with different dates.
For benefit in kind, if you purchased, leased or ordered a double cab pickup before 6 April 2025, you keep the old van treatment until the earlier of disposal, lease expiry, or 5 April 2029. That is wide protection, and you can even move the vehicle between your own employees in that window. It ends the moment you sell it or the lease runs out.
For capital allowances, the window was far narrower and has already closed. The old treatment needed a contract before 1 or 6 April 2025 and the expenditure incurred before 1 October 2025. There is no 2029 date on this side. A pickup bought today is a car for capital allowances, so no Annual Investment Allowance, no full expensing and no 40% first-year allowance. It goes into a pool at 6% a year for most diesel pickups. If you lease, 15% of the rental is also disallowed for vehicles over 50g/km.
6. What to think about before you buy
The practical questions, in the order they usually matter:
- Is a plain panel van enough? If so, it keeps the flat £4,170 charge and the capital allowances treatment.
- Would a single cab pickup do the job? It is normally still a van.
- When does the current lease expire? That is the date your protection ends, not 2029.
- Is electric viable? A zero-emission van has a nil benefit charge, which is the cheapest outcome available.
- Is there a written van policy? Without one, the commuting exemption is harder to rely on.
One more date to note: from 6 April 2027, reporting benefits in kind through payroll becomes mandatory, and vans and van fuel are in the first wave. Loose van records stop being a once a year P11D problem and become a monthly one.
A worked example: a £45,000 diesel pickup
Take a double cab pickup with a list price of £45,000, provided to a higher rate taxpayer. List price means the manufacturer's list price including accessories and delivery, not the discounted price you negotiated.
Treated as a van, the benefit is £4,170. The employee pays £1,668 in tax and the employer £625.50 in Class 1A.
Treated as a car at the 37% maximum, the benefit is £16,650. The employee pays £6,660 and the employer £2,497.50. That is roughly £6,860 a year more between them, for the same vehicle on the same drive. Add employer-provided private fuel and the gap widens, because the car fuel benefit is 37% of the £29,200 multiplier rather than a flat £798.
Things to watch out for
- Sole traders are outside the benefit in kind rules, but not outside the capital allowances change.
- Existing pickups are well protected. The risk sits with new purchases and lease renewals.
- Both private use conditions must be met, not just clean mileage.
- List price is not the price you paid. Discounts do not reduce a car benefit.
- The payload test still applies to VAT, so a vehicle can be a car for tax and not for VAT.
How Ollen Services Can Help
Choosing between a panel van, a single cab and a double cab pickup is a genuine tax decision, and far cheaper to get right before you sign than to discover on a P11D the following July. We work out what each option would actually cost you and your company, including the National Insurance and capital allowances side, and tell you plainly which one wins.
Because so many of our clients are in construction and the trades, this is a conversation we have most weeks. We also help put a simple van policy in place so the commuting exemption holds. We work in English and Polish.
Call us on 07513 491 259 or email hello@ollenservices.co.uk. If a vehicle purchase or a lease renewal is coming up, that is the moment to ask.