Private Use of Company Vans

Private use of company van

Where a company van is available for the private use of an employee, the employee is chargeable to PAYE and PRSI in respect of that private use.

Travel to and from work

Travel to and from work is private use.

Meaning of 'van'

A van means a mechanically propelled vehicle which –

  • is designed or constructed solely or mainly for the carriage of goods or other burden, and
  • has a roofed area or areas to the rear of the driver's seat, and
  • has no side windows or seating fitted in that roofed area or areas.

Where a crew cab or other similar type of vehicle meets all of these criteria it would be regarded as a van rather than a car – see Private Use of Company Cars regarding the meaning of 'car'.

Cash equivalent of private use of van

The notional pay to which PAYE and PRSI must be applied is determined by reference to the 'cash equivalent' of the private use of the van. The cash equivalent is 5% of the Original Market Value (OMV) of the vehicle supplied. The OMV must be calculated in the same manner as for cars as outlined in Private Use of Company Cars - Step One.

Van with subsequent modifications

Where the van has been modified, e.g. where a refrigeration unit has been installed, the original market value of the van excluding such modifications should be used.

Employee makes good to employer

The cash equivalent may be reduced by any amount required to be made good, and actually made good, by the employee directly to the employer, in respect of any part of the cost of providing or running the van.

Example 1 - No contribution from employee

A company van is made available to an employee for business and private use on 1 January 2007. The original market value of the van is €18,000. The employee is not required to make any contribution towards the provision or the running costs of the van.

The calculation of the notional pay is as follows:

€18,000 x 5% = €900

Notional pay of €900 (€17.30 per week / €75 per month) must be added to the employee’s money wages or salary for the purposes of calculating PAYE and PRSI.

Example 2 - Employee required to make contribution

A company van is made available to an employee for business and private use on 1 January 2007. The original market value of the van is €18,000. The employee is required to make good the sum of €500 per annum directly to the employer towards the running costs of the van.

The calculation of the notional pay is as follows:

€18,000 x 5%  =                         €900
  Less amount made good by employee =  (€500)
Notional Pay  =                         €400

Notional pay of €400 (€7.69 per week / €33.33 per month) must be added to the employee's money wages or salary for the purposes of calculating PAYE and PRSI.

Example 3 - Van available for only part of year

A company van is made available to an employee for business and private use on 1 July 2007. The original market value of the van is €20,000. The employee makes good the sum of Europer week directly to the employer towards the running costs of the van.

The calculation of the notional pay is as follows:
€20,000 x 5% = €1,000

As the van is only in use for half of the year, the notional pay is reduced as follows:
€1,000 x 6/12 = €500

The employee contributes €5 per week to the employer (€130 will be paid in the period 1 July 2007 to 31 December 2007). Therefore, the notional pay is further reduced as follows:
€500 - €130 = €370

The employer must include notional pay of €370 (€14.23 per week / €61.66 per month) as part of the employee's pay for the six month period from 1 July 2007 to 31 December 2007 for the purposes of calculating PAYE and PRSI.

Vans in 'van-pools'

There will not be a charge to tax in respect of a van which is in a 'van pool'. A van can be treated as being in a van pool if -

  • the van is made available to, and is actually used by, more than one employee and is not ordinarily used by one employee to the exclusion of the others, and
  • any private use of the van by the employees is merely incidental to business use, and
  • it is not normally kept overnight at the home of any of the employees.

Where it is proposed to treat a van as being in a van pool but there is a doubt about that treatment, the position may be agreed in advance with the local Revenue Office.

Van Allowances

The terms in section Private Use of Company Cars - Car Allowances apply in relation to vans in the same way as they apply in relation to cars.

Exemption from benefit in kind charge in certain circumstances

No taxable benefit will arise in respect of the private use of company van where all of the following conditions are met: -

  • the van is supplied by the employer to the employee for the purposes of the employee's work
  • the employee is required by the employer to bring the van home after work
  • apart from travelling from work to home and back to work, other private use of the van by the employee is forbidden by the employer, and there is in fact no other private use
  • in the course of his or her work, the employee spends at least 80% of his or her time away from the premises of the employer to which he or she is attached.

This exemption applies to company vans only.

Additionally, no taxable benefit will arise in respect of the private use of a commercial vehicle with a gross vehicle weight (i.e. gross laden weight) in excess of 3,500kg.

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