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Is a company car, van or pick-up truck cheapest for BIK tax?
Choosing a company van or pick-up truck over a company car could help to slash your tax bills, but is it the right fit for you? We have the answer...
If you’re offered a company car, it may seem a no-brainer to take it. However, not all fleet cars are actually that cheap in company car tax. If you’re looking to keep costs down, you can follow our tips for cutting benefit in kind Benefit-in-Kind (BIK) tax and our list of the cheapest company cars to run – plus there’s always the option of getting a van or pick-up truck as your fleet vehicle.
It’s worth thinking about, because choosing a van or pick-up truck over a car could help to save you a considerable sum of money in BIK tax payments. What’s more, you might be pleasantly surprised at how well modern vans and pick-up trucks drive, and the amount of technology they offer.
Here, we compare the three options to help you decide whether a company car, van or pick-up truck is the best fit for you…
Read more fleet and company car advice
The BIK costs of running a company car
Company cars are generally offered to staff members because, first and foremost, it allows their employees to run new cars, which helps them to feel valued and carry out any work journeys in a safe, modern vehicle. It also means that, when workers meet prospective clients, a smart fleet car will help to make a good first impression.
However, as far as staff members are concerned, a key downside is that His Majesty’s Revenue and Customs (HMRC) considers the vehicle as a Benefit-in-Kind. This means the employee will need to pay a specific tax in order to use the vehicle. You can find out more about that in our BIK tax guide.
The amount that you’ll need to pay in BIK each month depends on a few factors. These include:
- What fuel the car runs on
- How much CO2 it emits
- Which tax band the staff member is based in
For example, a Kia Sportage 1.6T GDi 157 48V ISG2 emits 147g/km of CO2 and will cost a 20% taxpayer £176 in company car tax each month. However, the plug-in hybrid Sportage 1.6T GDi 241 PHEV GT-Line produces just 25g/km of CO2 – meaning the monthly BIK fee is just £61.
The monthly fee is even lower if you choose an electric company car. A Tesla Model Y Standard Range RWD will cost the same taxpayer just £22.50 per month. However, despite the BIK tax figure being lower than an equivalent hybrid, petrol or diesel car, the EVs are generally more expensive to buy, so some employers might not offer them.
Read more: Is it worth getting a company car?
The BIK costs of a company van or pick-up truck
It’s easy to work out the tax costs of a company van, because they are subject to a flat rate of £4020 per year.
So, if you’re a 20% taxpayer, you’ll pay 20% of £4020, which is £804. Divide that by 12 and you’ll have a monthly payment of £67. Alternatively, if you’re a 40% taxpayer, you’ll pay £134 per month.
That’s less than what you’d pay for most petrol and diesel-powered company cars. And if you chose an all-electric van, you’ll pay precisely nothing in company car tax.
However, not all pick-up trucks qualify for the flat rate applied to commercial vehicles. Since 6 April 2025, all double-cab and extended-cab pick-up trucks have been officially considered passenger cars – meaning you’ll be subject to the same BIK rules as a company car.
For a pick-up truck to be considered a commercial vehicle in the eyes of HMRC, it must be a single cab model (meaning it has just one row of seats) and have a payload of at least 1000kg. This makes a company pick-up a less viable option if you plan to carry several passengers and severely reduces the selection of models on sale to just a handful.
Thankfully, the rules surrounding vans aren’t quite as stringent; however, the vehicle in question will still need to weigh no more than 3500kg to qualify.
Use our company car tax calculator
Company car, van or pick-up truck – conclusion
Benefits of a company car:
- Electric cars are typically cheaper to tax than petrol or diesel-powered vans
- Most cars offer more passenger space
- Cars are likely to be better-equipped and cheaper to run
Benefits of a company van or pick-up truck:
- Flat rate of £66 per month is cheaper than most petrol or diesel cars
- Electric vans and pick-up truck owners currently pay 0% in BIK tax
- Vans and pick-ups offer significantly more luggage space
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