When it comes to using vans or pickup trucks for business purposes in the UK, one of the key considerations for employers and employees is the Benefit in Kind (BIK) tax. BIK is a tax that employees must pay if they receive a benefit as part of their employment, such as the use of a company vehicle for personal use. This post will provide you with a comprehensive understanding of BIK on vans and pickup trucks, which vehicles qualify, the current tax rates, and how to calculate your BIK liability.
What is Benefit in Kind (BIK)?
Benefit in Kind (BIK) refers to any non-cash benefit provided to employees by their employer. When an employee has access to a company van or pickup truck for personal use, they are usually required to pay tax on that benefit. The tax is based on the vehicle’s value, emissions, and other factors.
In the UK, BIK tax is applied to company cars and vans, including those used for business purposes but also available for personal use. The amount of tax payable depends on several factors, including the vehicle’s CO2 emissions, fuel type, and whether the van qualifies for the reduced rate of BIK tax.
Which Vans and Pickup Trucks Qualify for BIK?
For vans and pickup trucks to qualify for BIK taxation, they must meet specific criteria. These vehicles are classified as ‘company vans’ if they are provided for business use but also available for personal use. The vehicles can be either fully electric, hybrid, or petrol/diesel-powered.
Vans
Company vans that qualify for BIK taxation include:
- Panel vans
- Crew vans
- Dropsides
- Tippers
- Minibuses
Example Vans that Qualify for BIK:
- Ford Transit
- Mercedes-Benz Sprinter
- Volkswagen Transporter
- Peugeot Boxer
- Renault Master
- Fiat Ducato
- Citroën Relay
Pickup Trucks
In general, pickup trucks also qualify for BIK taxation when they are provided by the employer for personal use. However, for tax purposes, there are some differences between how pickup trucks are taxed compared to traditional vans. A pickup truck is generally considered a van for BIK purposes if it is designed to carry goods, not passengers. For example, a Ford Ranger or Toyota Hilux may qualify for BIK taxation depending on how the vehicle is configured and used.
Example Pickup Trucks that Qualify for BIK:
- Ford Ranger
- Toyota Hilux
- Mitsubishi L200
- Isuzu D-Max
- Nissan Navara
- Volkswagen Amarok
What Are the BIK Rates for Vans and Pickup Trucks?
The BIK rate for vans and pickup trucks is calculated based on various factors, including the CO2 emissions of the vehicle and the fuel type (diesel, petrol, hybrid, or electric). Vans typically attract lower BIK rates than company cars because they are generally viewed as work-related vehicles.
The key factors that determine the BIK rate for vans are:
- CO2 Emissions: For electric and plug-in hybrid vehicles, the BIK rate is much lower, and in some cases, it’s even zero for fully electric vans.
- Fuel Type: Diesel vans have a higher BIK rate compared to petrol, hybrid, or fully electric vans.
- Personal Use: If the van is used exclusively for business purposes, no BIK tax is due. However, if it is used for personal trips, tax will be applicable.
BIK Rates for Vans in the UK (2023-2024 Tax Year)
For the 2023/24 tax year, the UK government introduced a simplified BIK structure for vans. The standard BIK rate for diesel vans is currently set at £3,600 per year, but this can be adjusted based on the vehicle’s emissions and other factors.
Here’s a breakdown of how the rates typically work:
Diesel Vans
- Standard diesel vans: £3,600 per year BIK.
- Electric vans: £0 BIK (since electric vans produce no CO2 emissions, there is no tax liability).
- Plug-in hybrid vans: The rate can range from £1,000 to £2,500 depending on the vehicle’s emissions and electric range.
Example BIK for Specific Vans:
- Ford Transit (diesel, standard emissions): BIK tax of around £3,600 per year.
- Mercedes-Benz Sprinter (diesel, higher emissions): BIK tax of £3,800 per year.
- Peugeot Partner Electric: £0 BIK, as it’s fully electric.
Pickup Trucks
For pickup trucks, the BIK rate is slightly different because they are taxed under the same rules as vans. Typically, a pickup truck used for business purposes but with personal use will also face a £3,600 per year BIK rate, unless it’s an electric or hybrid model.
For example:
- Ford Ranger (diesel): Around £3,600 per year BIK.
- Toyota Hilux (diesel): Around £3,600 per year BIK.
- Mitsubishi L200 (diesel): Around £3,600 per year BIK.
How to Calculate Your BIK Liability
To calculate the BIK tax liability on your van or pickup, follow these steps:
- Determine the Vehicle’s List Price: The list price is the full purchase price of the vehicle, including VAT and any extras added to the vehicle.
- Find the CO2 Emission: The CO2 emissions of the vehicle will determine how much you pay in BIK tax. Electric vans have zero emissions and qualify for £0 BIK. Diesel vans generally attract the standard rate.
- Use the BIK Tax Calculator: The UK government provides a BIK tax calculator on its website to help you work out how much tax you’ll pay based on your van’s emissions, fuel type, and list price.
- Check the Tax Rate: The tax rate for vans and pickups is generally based on a percentage of the list price, but this percentage is adjusted based on the vehicle’s emissions.
Example Calculation:
Let’s say you lease a Ford Transit Custom with a list price of £25,000 (including VAT) and a CO2 emission of 150 g/km.
- Step 1: The list price is £25,000.
- Step 2: CO2 emission of 150 g/km.
- Step 3: Using the current BIK table, the rate for this vehicle is £3,600 per year.
- Step 4: If you’re a higher-rate taxpayer (40%), your BIK tax would be £1,440 (£3,600 x 40%).
Final Thoughts
BIK taxation is an essential consideration for both businesses and employees using company vans and pickup trucks for personal use. By understanding how BIK works, the vehicles that qualify, and how to calculate your tax liability, you can make better decisions when leasing or purchasing vans and pickups for business purposes.
Always make sure to check the latest rates and consult with a tax professional to ensure you’re getting the most out of any manufacturer discounts or savings available. And don’t forget that fully electric vans offer the most tax-efficient option, with £0 BIK tax!
If you’re ready to lease a van or pickup for your business, be sure to consider the manufacturer discounts and special offers available in the UK to reduce your upfront and ongoing costs.
