It’s a relatively straightforward process to buy a van through your business. But before you do so, you need to be aware of the tax and insurance implications, along with any added costs you may face.
In this post we’ll cover the ins and outs of buying a van through your business. If you have any questions about your insurance or risk management responsibilities as a business owner, we’re here to help. Get in touch by calling, 020 8290 9099 or email us at cm@anthonyjones.com.
Tax and VAT Rules For Buying a Van Through Your Business
If you buy a van through your business, you can get claim the VAT back, as long as the van will be used for business purposes. So it’s important to be clear about how you’ll be using your van before you proceed.
You can use your van to commute to and from your business premises and this counts as business use. A van that is primarily used for business use, even if you do a small amount of private mileage in it, is not treated as a benefit in kind for tax purposes.
Read our full guide to benefit in kind rates here.
Can I Claim Capital Allowances From Van Purchase?
You might decide to lease a van through your business. If you do so, you may be able to claim the leasing costs as a business expense. However, if you decide to buy the van outright, you will be able to claim some tax relief via capital allowances.
For tax purposes, vans are classed as plant and machinery. This means you may be able to claim 100% of the cost to reduce your business’s taxable profits. But again, you will likely only be able to receive this tax relief if the van is a commercial vehicle used for business purposes.
Only certain vehicles are classed as vans for tax purposes. Take a look at HMRC’s list of what constitutes a van.
If the vehicle you intend to buy does not count as a van, then you may still be able to get some tax relief. The amount you get will depend on the van’s CO2 emissions. For a light commercial vehicle, you will likely be able to deduct 8% of the vehicle’s purchase price from your annual profits.
Should I Buy New or Second Hand Van?
If you buy a brand new van through your business, you may be able to benefit from certain financing options. Yet you can make significant savings if you buy a van second-hand.
Be sure to check out our guide to what to look for when you’re buying a van second-hand, to ensure you’re getting a good deal.
Make Sure You’re Fully Covered
Whether you buy your van new or second-hand, it’s a good idea to take the vehicle for a test drive. You may need to sort out your own insurance cover for your van test drive.
Our temporary van insurance can give you all the cover you need for as little as one hour, or as long as 28 days. For a free quote, call us on 020 8290 9099 or email us at cm@anthonyjones.com.
