Five ways your business can benefit from commercial van leasing

Interested in leasing a commercial vehicle?

If you’re in need of vans for your company, leasing may be the best option for you. With tax benefits and savings on maintenance, leasing for a business works out very economical.

Every part of running a business can be stressful, whether that’s lack of sales, debt, or not enough money, but there are various things you can do to make the running of your business smoother and your life easier.

For one, if you're in need of commercial vehicles, leasing a van through your company can be the most cost-effective option for your business, as well as being a hassle-free alternative.

Varying advantages from tax benefits to reduced downtime to savings on maintenance, leasing your commercial vehicle could lead to big savings.  

We appreciate that leasing may not be for everyone so, we’ve pulled together a list of some of the pros of leasing a commercial vehicle as well as some points to consider so you can make up your own mind.

Unsure of a commercial vehicle lease? Here are the benefits!

Tax benefits

• You can reclaim 100% of VAT charged on your monthly leasing cost, with this reduced to 50% if you use your company vehicle for personal use too. You can’t do this if your company buys the vehicle!
• You can also reclaim 100% of VAT on excess mileage and maintenance packages, classed as service charges. You can offset 100% of the cost against the annual profits.
• When you buy a van for your business, they count as an asset on your balance sheet. When you lease it, it is not capitalised on your balance sheet because it is considered as a hiring vehicle for a contracted period. This frees up credit which can be used elsewhere.

No large up-front capital investment required

You can maximise your cash flow. When leasing for your business, no large up-front payments are required, so you can retain the cash in your business. This will free up valuable working capital.

Savings on maintenance

Considering a lease van will be brand new and that a vehicle is in the best condition during its first three years, you shouldn’t experience that many maintenance issues, meaning your maintenance costs should be decreased.

At Vanparison, we offer van maintenance packages for an extra monthly fee which covers servicing, tyre replacement, and MOTs meaning you won’t have much to worry about.

Easy budgeting

As a business owner, you’d probably prefer to know the exact monthly outgoings to ensure you keep within your budget. Buying a vehicle outright is very costly, and not every new or existing business is able to afford that kind of cash outlay.

One of the perks of leasing is the ability to spread the cost over fixed monthly payments. Knowing what you’ll be spending each month gives you the certainty and flexibility you need to structure a budget.

As said before, if you take out a maintenance package as well, you pay an extra fixed monthly fee and you won’t have to deal with any unexpected costs if any maintenance issues do arise.

Reduced downtime

Downtime links to maintenance. If you were relying on vehicles that were constantly breaking down and needing repairs, you’d be dealing with a lot of downtime.

This could cause delays if you’re making deliveries in tight time frames or need to make long journeys regularly, thus leading to even more issues for your business.

Things to consider:

• The government taxes a company vehicle because it’s a perk or a benefit that is not included in the employee’s salary. This tax is called Benefit-In-Kind (BIK). The amount of BIK tax you’ll have to pay is based on its environmental impact. So, it might be worth considering an electric car lease for reduced CO2 emissions to access the lower BIK tax rates.
• If you offer a company vehicle to your employees, you’re expected to pay higher national insurance.
• Capital allowance allows taxpayers to get tax relief on capital expenditure by allowing it to be deducted against their annual taxable income. You can claim capital allowances on cars that you buy and use for your business. However, capital allowance cannot be claimed on a leased vehicle, unfortunately.

We offer a wide range of van leasing deals, allowing you to choose a vehicle that will suit your business’ needs. If you would like to know more about our best van lease deals, get in contact with a member of our team.