If you are looking to lease a van, then it stands to reason that you want to make sure that doing so will represent good value for money, as well as help you transport heavy or bulky items with ease. For that reason, it can be useful to know if leasing a van is tax-efficient.
Good news for business owners
The good news for business owners looking to lease vehicles for their employees to use on the job is that it can make an excellent choice from a tax point of view. Read more about the benefits of leasing vehicles for your company here.
When you lease a van, you are allowed to reclaim 100% of the VAT spent on the rental, as well as 100% of the VAT spent on maintenance costs. And, if you are interested in van leasing Bristol, it makes sense to see what’s available from reputable providers such as Autolyne.
To stay in control of tax obligations for any vans being leased by the company, it’s important for business owners to keep monthly mileage records for each vehicle, to indicate which journeys were made for work or personal use, and if the fuel used for such personal journeys was reimbursed by the company.
Rules for employees
For everyone else, the rules on tax will vary depending on whether you are registered as a sole trader or an employee.
Employees who use a van leased by their employer can qualify for a BIK (Benefit In Kind) tax, which is also commonly known as Company Van Tax. This is the tax that is applicable when you receive any advantages or perks outside of your regular contracted salary. This usually refers to any times that you may make use of company vehicles for your own personal use, and not when you are driving the van as part of your job. The rate for BIK tax is Ł3,170 for any type of light commercial vehicle, which, for a 20% rate taxpayer, would work out as Ł52.84 a month, or Ł634 a year.