Vans keep the North’s trades moving - from plumbers in Bradford to roofers in Sunderland and couriers around Trafford Park. From 6 April 2026, the tax treatment on employer‑provided vans and fuel ticks up again under a Treasury order, with consequences for take‑home pay and business costs.

The Order lifts three figures for 2026–27 and later years: the flat‑rate van benefit to £4,170, the van fuel benefit to £798, and the car fuel benefit multiplier to £29,200. It was made on 1 December and laid before MPs on 2 December 2025, taking effect from the start of the new tax year.

Who actually pays? A van benefit charge applies when an employee’s private use is more than “insignificant” and goes beyond ordinary commuting. If use is genuinely limited to business journeys plus commuting - and any other private trips are only trivial - there’s no charge. HMRC sets out the “restricted private use” condition and what counts as ordinary commuting in its manuals.

HMRC also gives practical examples. Dropping a child at school on the way to site or a once‑or‑twice‑a‑year run to the tip is usually fine; weekly supermarket trips, weekends away or regular social use are not. If you’re allowing that sort of private use, expect a charge.

What it means for pay packets in the North: for a basic‑rate taxpayer, tax on the van benefit will be about £834 a year (20% of £4,170) - roughly £2.50 a month more than this year. For a higher‑rate taxpayer it’s about £1,668 - around £5 more each month. If free fuel for private mileage is provided, add about £159.60 (basic rate) or £319.20 (higher rate) for 2026–27. These figures follow directly from the new van benefit and fuel benefit amounts.

For employers, Class 1A National Insurance is due on these benefits. At the current Class 1A rate of 15%, the NIC on the van benefit comes to £625.50 per van (up by £22.50), and £119.70 on the van fuel benefit (up by £4.35). Rates are confirmed for 2025–26 at 15%; the final 2026–27 rate will be set in due course.

Scale that up and it matters. A Leeds heating contractor with 10 vans allowing private use would see around £225 more Class 1A NIC on the van benefit next year - and roughly £43.50 extra if they also cover private fuel. For employees, the extra tax is small per head but noticeable over a year, especially with frozen income tax thresholds pulling more pay into higher bands, as the OBR has highlighted.

Electric vans remain a useful option. Where a van cannot emit CO2 when driven (for example, a fully electric van), the van benefit stays at nil - and the van fuel benefit does not apply either. That can take the BIK charge off the table entirely if a pure‑EV van suits the job.

A reminder for firms running mixed fleets: the £29,200 car fuel multiplier is used with a car’s CO2‑based percentage to work out the BIK for private fuel in company cars. If you’re still offering free fuel for cars, the uprated multiplier means a higher charge from April 2026.

Housekeeping now will save money later. Tighten van policies to keep private use genuinely insignificant, make sure any ban on private use is enforced in practice (not just on paper), consider pooled vans where workable, and keep mileage logs to evidence business use. HMRC’s guidance is explicit on these points.

Don’t forget the admin shift coming down the track. HMRC has pushed back mandatory payrolling of most benefits in kind to April 2027, meaning tax and Class 1A NIC on benefits will be reported in real time through payroll. Payroll teams across the North should plan changes during 2026.

Bottom line for Northern SMEs and trades: the 2026–27 uprating won’t sink a business, but it will chip away at margins and pay packets. Check who really needs private use, review fuel policies, and model costs now - well before the new tax year starts on 6 April 2026.