Answers · UK 2025/26

What is the tax difference between a company van and a company car in the UK?

Company vans have a flat benefit in kind of £3,960 regardless of value or emissions. Company cars use a percentage of the list price based on CO2 emissions -- meaning a £40,000 petrol car could generate a £12,000 BIK, more than three times the van figure. Electric vans have zero BIK; electric cars have a 3% BIK rate in 2026/27. The classification as van or car depends on construction, not personal preference.

Last updated: 30 June 2026Last reviewed: 30 June 2026How we verify

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The tax treatment of company vans and company cars differs fundamentally in how the benefit in kind is calculated, making the distinction commercially significant. **Company van BIK (2026/27)** - Flat rate: **£3,960** regardless of the van's age, value, or fuel type - Zero-emission (electric) van: **£0** - Private fuel for van: additional **£757** flat rate charge - Applies to vehicles of a type primarily suited to the conveyance of goods with a payload of at least one tonne **Company car BIK (2026/27)** - Calculated as a **percentage of the car's list price** (including options) based on CO2 emissions - Petrol car at 150g/km CO2: 34% BIK rate - On a £30,000 list price car: 34% x £30,000 = **£10,200 BIK** -- almost 3x the van flat rate - Electric car: **3% BIK rate** in 2026/27 (rising to 4% in 2027/28 and 5% in 2028/29) - On a £40,000 electric car: 3% x £40,000 = **£1,200 BIK** -- significantly less than the van flat rate for electric vehicles **Employee tax comparison (higher-rate taxpayer)** - Van: £3,960 x 40% = **£1,584/year** - £30,000 petrol car (150g/km): £10,200 x 40% = **£4,080/year** - £40,000 electric car: £1,200 x 40% = **£480/year** **The van vs. car classification** HMRC determines whether a vehicle is a "van" or "car" based on construction, not what the driver calls it: - Primary purpose must be carriage of goods - Payload of at least 1,000kg - Double-cab pickups: revised HMRC guidance from 2024 means most double-cabs with payloads of 1 tonne are still vans IF they do not have a crew cab seating more than 3 people comfortably plus a driver. Always confirm the specific vehicle. **No private use exception** If a van is genuinely available only for work with only incidental private use (e.g. taking it home overnight), there is **no BIK at all** -- a potentially large advantage over cars where any private use triggers BIK. **Conclusion** For an employee who needs a vehicle primarily for carrying goods, a van is almost always significantly cheaper from a tax perspective than an equivalent car. The exception is a low-emission or electric car, where the car BIK can be lower than the van flat rate.