If you’re self-employed, a sole trader or your manager has tasked you with buying a new van, knowing whether to lease a van or buy it outright can be a real challenge. Whether it is for domestic or commercial use, a van is a significant investment. Nationwide Cars weigh up the advantages of buying or leasing a van, and then break down the process for you.
What is the difference between buying and leasing a van for business?
There are many different ways to finance your van. When you buy a van with cash outright, the van belongs to you. Should you choose to lease a van, you’ll pay off a balance via a monthly fee, but you won’t technically own the vehicle. Both come with their own pros and cons - in this blog, Nationwide Cars outline the advantages of both:
The advantages of buying a van
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You have more freedom as you own the van
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You can add your business name and contact details to the van
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You are not tied into a leasing contract
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You can claim the cost of buying the van against your income tax bill
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You can sell the van later on if you need cash
The advantages of leasing a van
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You don’t need an upfront sum of cash
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You pay a fixed amount over a set period of time
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You don’t have to worry about depreciation.
What expenses can I claim for my van if I’m self-employed?
Car, van and travel expenses
You can claim for the following:
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vehicle insurance
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repairs and servicing
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fuel
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hire charges
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breakdown cover
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parking
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train, bus, air and taxi fares
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hotel rooms
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vehicle licence fees
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meals on overnight business trips
You can’t claim for:
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non-business driving or travel costs
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fines
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travel between home and work
One way people calculate their mileage is through the simplified expenses method (also known as flat-rate).
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Vehicle |
Flat rate per mile with simplified expenses |
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Cars and goods vehicles first 10,000 miles |
45p |
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Cars and goods vehicles after 10,000 miles |
25p |
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Motorcycles |
24p |
Claiming tax back when you buy your van
There are two ways you can claim tax back one you’ve purchased your van:
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If you use traditional accounting, you can claim it back as capital allowance.
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If you use cash basis accounting, you can claim it back as capital allowance - but you cannot use simplified expenses.
How to buy a van if you’re self-employed
1.Decide if you want a new or second-hand van
The first step in your van purchasing journey is to decide if you want a new or second-hand van. Each come with their own benefits - you just need to choose which is right for you. While second-hand vans are cheaper, newer vans are more reliable and don’t have as many issues. Research, weigh-up the options and you’ll come to a great decision. Find out what to check when buying a used vehicle.
2.Decide on the make and model of the van
There are many different van makes and models out there - you just need to find which one is right for you. Whether you want a spacious 2.2-litre Citreön Relay for your equipment, or a fuel-efficient, 2.2 litre Ford Transit, you should write a list of your requirements, do some research and find out which van will be the right one for you.
3.Get the money together
Buying a van outright is a great idea if you have the cash upfront or access to a bank loan that’s got good APR. Once you’ve purchased the vehicle upfront, you don’t need to worry about any additional payments, making future budgeting a little easier. Remember, should you choose to get a bank loan, you can reclaim the interest charges against tax.
4.Find a car dealer
Whether you’re buying a new or used van, you should purchase it from a reputable car dealer. Once again, this requires research! We recommend checking the following:
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Have you read reviews both on their website and on other sites such as TrustPilot?
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Does your desired trader have a strong online presence?
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Is there enough information about the vehicles and how to finance them?
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Do they work with any other associations?
The experts at Nationwide Cars pride themselves in delivering our customers with free and impartial advice so that you can choose the perfect van for your business. Contact us today.
