Heading into 2025 we are getting ready for some major Benefit in Kind changes. These changes are, to be brutally honest, a bit of a head scratcher. We will delve briefly into the history of the Benefit in Kind situation before looking at the changes coming into force from the 6th of April 2025. Our hope is that this short blog post will help you to make the right informed decisions for your fleet.
Looking Back
Early electric vans started arriving in the early to middle 2010’s. It was also understood that there was a desire to act favourably upon electric vans when it came to taxation. Environmental concerns were, after all, a hot topic for any government of the day.
In 2015 it was decided to introduce a rate of 20% of the full benefit charge. This rate would be maintained for another 2 tax years afterwards before rising to 40% in 2018, then 60% in 2019 and 80% in 2020. Then, in 2021, we saw a major shakeup of the Benefit in Kind situation. Electric vans would now be zero rated, meaning no Benefit in Kind tax was required.
What Lies Ahead With Benefit in Kind Changes?
As many will know, the honeymoon period for electric vehicles is slowly coming to an end. Vans will have to start paying Benefit in Kind fees from April, in line with electric cars. There are, however, some extra benefits that apply to vehicles classed as an electric van. There are, however, a few definition issues that make the further benefit in Kind changes more complicated.
Is it a Van or a Car?
Many of you are probably thinking that it is obvious what a van is and what a car is. However, there are a few select vehicles that have managed to blur the lines. It certainly doesn’t help that some vehicles have changed categories over the years. This is something that is so complicated that it has been taken to the senior UK courts in order to make a determination (which, of course, later changed).
HMRC and the Coca-Cola Company were the protagonists in this major case. Coca-Cola had been using Vauxhall Vivaro and Kombi vans. HMRC argued that these vans were in fact cars due to having two rows of seating. Coca-Cola argued that they were obviously vans and they were used for commercial purposes. This was a case that would go the way of HMRC. The tax man won yet again.
This position changed again at a later point, with vehicles, including the Vauxhall Vivaro-e Double Cab and some of the EVision pickup trucks being classified as vans. For tax purposes.
Changes Are Coming Soon
As stated at the beginning of this blog, there are some changes coming in from the 6th of April. Some vehicles that we have just become used to being vans are now, yet again, cars. This includes the Vauxhall Vivaro-e Double Cab, the Maxus T90 and the Rivian R1T. While electric vans come into line with electric cars, these vehicles will be double punished.
There is a way to delay these effects though. If you start your hire before the 6th of April 2025, you will keep the same benefits afforded to vans until the 6th of April 2029, or until the end of the hire period, whichever comes first.
In Conclusion
Tax is confusing at the best of times. When you start changing the definitions of the vehicles being taxed, then those complications reach a whole new level. It is infuriating that the goalposts are being moved so often. Plus, although we know some form of taxation has to come in at some point, it is disappointing that the rates are coming in so early. This is especially true for commercial vehicles.
The good news is that EVision can help you get ahead of the curve. We have the Maxus T90, Rivian R1T and the Vauxhall Vivaro-e Double Cab available for short or long-term hire. Get yours before the 6th of April to continue making tax savings.
