Tips

Published on December 15th, 2014 | by Falcon

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Getting a van for your business?

Getting a van for your business is an important decision and one for which you need to consider many factors. The first thing to establish is exactly what kind of van your business really needs and whether those needs will change in the future.

Here we look at some of the basic things you need to consider, such as buying a new or used van, leasing rather than purchasing, van tax and insurance.

New van or old?

A new van will always say positive things about your business; it will convey the impression that your business is doing well. A tired looking old van will say the very opposite, and the impression it gives your customers could be bad for your business. Naturally the problem with buying new is the up-front cost. Just like new cars, new vans depreciate in value very quickly during the first couple of years.

While vans are usually robust vehicles and are unlikely to let you down, if your old van has been abused then there could be many things wrong with it. If you really need to save money by buying used, then be careful about what you buy. Unless you know a great deal about used vehicles, it is better to get some professional advice. The last thing your business needs is to lose a contract or upset a client just because the tired old van broke down on the way to the job. If you decide to buy a used van, then it is worthwhile checking with the DVLA that it matches its basic information and that it is taxed and has a MOT. It is also worth carrying out and online history check.

Buy or lease

There are many good reasons for choosing to lease a van rather than buy one. Certainly your accountant will be pleased to charge the cost of your van to operating costs on your profit and loss account rather than having it as a fast depreciating asset on your balance sheet. It will also leave you with cash that you can spend on growing your business.

When you lease a van it remains the property of the leasing company for the entire duration of the lease. You are simply paying for permission to use it over that period. At the end of the leasing period all you need do is return the van. As long as you return it in a reasonable condition for its mileage, and you haven’t exceeded to agreed mileage over the leasing period, there should be no additional charges. You can then opt to lease another van on another contract.

Leasing is far more flexible than buying. Should the nature of your business change, you might decide to lease a larger van or even a smaller one. As your business grows you can increase the size of your van fleet without having to find much additional capital. You also avoid the problem of disposing of the van, for instance by selling it on the used van market, when it has served its useful life for you.

Van Insurance

While anyone can insure a van, van insurance is more usually considered to be a business product, for instance limited companies and sole traders may insure vans and other commercial vehicles on the More Than business van insurance pages. You should also consider insuring your van contents, for instance many tradesmen leave their tools in their van overnight, and they can be vulnerable. If this applies to you, then look for a policy where you can add “tools left in van” cover.

Tax benefits

There are significant tax benefits on using a van for your business rather than a car, but the rules are complex. If the van weighs less than 3,500 kilograms and it is used by business owners or employees for purposes other than exclusively for the business, then van tax will become due. If it weighs over 3,500 kilograms it is exempt from van tax unless it is exclusively for private use.

 


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