Huge tax hikes could hit businesses across Cardiff unless the private use of company vans is restricted to journeys between home and work, following announcements in the last budget, warns John Squire at Cardiff based accountants Graham Paul.

The changes include a minimum 500 per cent increase in taxable benefits on whoever pays the tax bill if employees are allowed the unlimited use of a company van.

John at Graham Paul comments: “The news could result in large tax increases for those who think they have the ‘perk’ of private usage from a company vehicle. However it could be that they will simply be better off by restricting the private use of company vans to work journeys only.”

Current rules state that the taxable benefit is £500 for vans up to four years old and available for private usage, and £350 for vans over four years old at the end of the tax year. The employer has to pay 12.8 per cent national insurance on the benefit.

From 6 April 2005, the tax and employer’s NIC charge can be avoided if private use is restricted to employees’ home to work travel. However, from 6 April 2007, the standard charge for unrestricted private use will be increased from £500 to £3000, and the discount for older vans will be removed.

For more information contact contact John Squire at Graham Paul on 01656 679800.