In short: from April 2026, the flat-rate van benefit charge and van fuel benefit charge both increase, and Vehicle Excise Duty (VED) rises in line with inflation. At the same time, a new 40% first-year capital allowance for leased vans (effective January 2026) improves the cash-flow case for leasing. None of this changes overnight, but it's worth factoring into a 2026 van finance decision.
What's changing, and by how much
| 2025/26 | From April 2026 | |
|---|---|---|
| Van benefit charge (flat rate) | £4,020 | £4,170 |
| Van fuel benefit charge | £769 | £798 |
| VED (Vehicle Excise Duty) | — | Rises with inflation from April |
The van benefit charge applies if your employer provides a van you (or your family) can also use privately, not just for work - it's a fixed annual amount added to your taxable income, rather than a percentage-based calculation like company car tax. The fuel benefit charge applies on top if private fuel is also provided.
New: 40% first-year capital allowance for leased vans
From January 2026, businesses leasing vans became eligible for a 40% first-year capital allowance - an upfront tax deduction that improves cash flow in the year the lease begins, compared with spreading the deduction evenly over the lease term. This is specifically aimed at making leasing more attractive relative to outright purchase for fleet and small business operators.
How this affects a buy vs finance vs lease decision
- If a van is genuinely used only for business (with private use restricted, e.g. no take-home use), the benefit-in-kind changes above may not apply to you at all - check your specific usage pattern.
- If private use does apply, the increase from £4,020 to £4,170 is a modest year-on-year rise (roughly 3.7%), not a step-change - but it compounds with fuel benefit if private fuel is also provided.
- The new leasing capital allowance is a genuine incentive shift toward leasing for businesses that lease rather than buy - worth discussing with your accountant if you're currently financing via HP and considering a switch.
- None of these changes affect the interest rate or APR you're offered on van finance itself - they sit alongside your finance costs, not inside them.
Model your monthly cost either way
Compare a standard HP purchase against a balloon/lease-style structure using our HP calculator and balloon calculator.
Not tax advice
Benefit-in-kind and capital allowance rules depend on your exact employment status, business structure and how the van is actually used - this article explains the headline 2026 changes, not your personal tax position. If in doubt, check with an accountant before making a purchase or lease decision based on the tax treatment.