Company Van Benefit In Kind Taxation
When employees receive a company van they will be taxed on the Benefit in Kind (BIK) if being used for personal use. The tax paid on the company van BIK is referred to as Company Car Tax (CCT).
When employees receive a company van, they will be taxed on the Benefit-in-Kind (BIK) if the vehicle is used for private journeys. Casual or insignificant private use, such as a short detour on a commute, is usually exempt.
This page provides an overview of the UK company van taxation system, including van-only benefits, van-and-fuel benefits, and the updated tax rules for pick-up trucks. The following calculations apply to the 2026/27 tax year, as per the latest HMRC guidelines.
Company Van Taxation (Personal Use) 2026/2027 (As of 6th April 2026)
For the current tax year, the flat-rate benefit charges are fixed as follows:
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Standard Van Benefit Charge: £4,170
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Van Fuel Benefit Charge: £798
Zero-Emission Exception
The government reduced the van benefit charge to zero for fully electric vans that produce no carbon emissions. If your team drives electric vans, there is no BIK tax to pay on the vehicle or the charging support.
Calculation examples (for the year):
Van Only Benefit (£4,170 charge)
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20% Taxpayer: £834 per year (£69.50 per month)
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40% Taxpayer: £1,668 per year (£139.00 per month)
Van and Fuel Benefit (£4,170 + £798 = £4,968 total benefit)
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20% Taxpayer: £993.60 per year (£82.80 per month)
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40% Taxpayer: £1,987.20 per year (£165.60 per month)
The government reduced the van benefit charge to Zero for vans that produce zero carbon emissions from 6th April 2021 (Finance Bill 2020)
These figures will rise by the CPI (Consumer Price Index) in 2027 (April)
Pick-Ups
The tax rules for double-cab pick-ups depend entirely on when the vehicle was ordered or leased.
Pick-Ups Ordered on or after 6 April 2026
HMRC classifies these vehicles as cars rather than commercial vans. The benefit is calculated by multiplying the pick-up's list price (P11D value, including optional accessories) by a percentage based on its CO₂ emissions. So, if you choose a plug-in hybrid pick-up emitting less than 50g/km, the tax rate depends on its electric-only range. The official BIK percentages for these vehicles across current and future tax years are outlined below.
Pick-Ups Ordered or Leased before 6 April 2025
If your business already holds a lease or purchased a double-cab pick-up before 6 April 2025, transitional rules apply. You can continue to pay the much lower, flat-rate standard van BIK rates until the vehicle is sold, the lease expires, or until 5 April 2029 (whichever comes first).
| CO₂ (g/km) | Electric Range (Miles) | 2025/26 (%) | 2026/27 (Current) (%) | 2027/28 (%) | 2028/29 (%) | 2029/30 (%) |
|---|---|---|---|---|---|---|
| 0 | N/A | 3 | 4 | 5 | 7 | 9 |
| 1–50 | More than 130 | 3 | 4 | 5 | 18 | 19 |
| 1–50 | 70–129 | 6 | 7 | 8 | 18 | 19 |
| 1–50 | 40–69 | 9 | 10 | 11 | 18 | 19 |
| 1–50 | 30–39 | 13 | 14 | 15 | 18 | 19 |
| 1–50 | Less than 30 | 15 | 16 | 17 | 18 | 19 |
| 51–54 | N/A | 16 | 17 | 18 | 19 | 20 |
Employers National Insurance
Employers must pay Class 1A National Insurance Contributions against any employee Benefit in Kind.
Electric Vehicle Range Figures
Electric range represents the maximum distance a vehicle can travel in pure electric mode without recharging the battery. This figure is officially determined using the electric mileage range specified on the vehicle’s UK approval certificate or EC certificate of conformity.
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Yes, but it depends on when the vehicle was ordered. Following a major change, double-cab pick-ups ordered or leased on or after 6 April 2025 are treated as company cars for tax purposes, which significantly increases the Benefit in Kind (BIK) tax for the driver.
However, if your vehicle was ordered or leased before 6 April 2025, transitional rules allow you to keep paying the much lower, flat-rate commercial van tax until your lease ends, the vehicle is sold, or until 5 April 2029 (whichever comes first).
Yes, the van benefit and van fuel benefit charges are adjusted for inflation each year. Following the increase in line with the Consumer Price Index (CPI) in April 2026, these figures will continue to be reviewed annually by HMRC and will likely rise again at the start of the next tax year in April 2027.
Fully electric, zero-emission vans remain exempt from the standard van benefit charge.