Self employed van drivers face insurance hike

Taking out specialist van insurance is one way of proving to the taxman that drivers are not avoiding tax on personal use of the vehicle.

Van insurance generally offers business cover only – not social, domestic or pleasure like many standard family car policies.

The taxman is targeting mainly self-employed van drivers who use their vehicles for private trips that are more than ‘insignificant’, like picking up some shopping on the way home.

HM Revenue and Customs wants to extract more tax and national insurance for these trips as they say they are a benefit of having the van, and such benefits should be taxed.

Many self-employed van drivers are due to receive questionnaires from HMRC asking them about the use of their vehicles – and if the driver can show the vehicle is only covered form business and the family has a car for private use, it’s likely the taxman will not chase more tax.

Producing a specialist van insurance policy specifying no private use of the vehicle is good evidence to prove no tax is due.

“There is a tax charge where, because of their employment, a van is made available to a director or an employee earning £8,500 a year or more, or to a member of their family or household and the van is actually used privately,
” said an HMRC spokesman.

This tax charge can add up to £350 per tax year the benefit is not disclosed plus fines and penalties for evading any tax due.

Van drivers who do take their vehicle out on private trips without paying towards the fuel costs are also subject to a further tax charge depending on their personal mileage.

The crack down on vans is part of a new drive by HMRC to claw back unpaid tax from businesses and individuals. Other taxpayers under scrutiny include the self-employed claiming tax credits.

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