As a tradesperson, your wheels are part of your essential kit. You might not leave home without your toolkit, but you probably can’t leave home at all without your wheels! So, in this article, we explore all the elements of managing a works van, from costs to claims and more.

Managing a Works Van: Costs, Claims, and More:

Handling Mileage and Vehicle Expenses:

You can claim vehicle expenses in one of two ways.

Flat Rate Mileage Allowance:

You can calculate your vehicle expenses using a flat rate for mileage instead of the actual costs of buying and running your vehicle, such as insurance, repairs, servicing, and fuel. The claimable flat rate is 45p per mile for the first 10,000 miles and 25p per mile thereafter. This mileage allowance covers all vehicle expenses, including fuel, insurance, and maintenance.

However, you cannot claim using this flat rate method for a vehicle you’ve already claimed capital allowances for, or you’ve included it as an expense when you worked out your business profits.

If you have several vehicles in your fleet, you do not have to use flat rates for all of them. However, once you use the flat rates for a vehicle, you must continue to do so as long as you use that vehicle for your business.

Allowable Actual Expense Method:

Alternatively, you can claim for all of the actual vehicle costs. Costs can include fuel, servicing, repairs, insurance, and depreciation. This method requires detailed record-keeping of all expenses.

Which Method Should You Choose?

The simplified flat rate allowance may suit you if you’re a sole trader, have lower mileage or use your vehicle for personal use.

The actual expense method can be more advantageous if the vehicle is solely used for work or incurs high costs.

Top Tip – A Tracking Tool:

Manually tracking mileage can be time-consuming. However, some tools can help. Tripcatcher, which integrates with Xero, makes it easy to log journeys and ensures accuracy in tax reporting.

To Buy or Lease – That is the Question!

Just as The Clash asked, “Should I Stay or Should I Go?” there comes a time in every tradesperson’s life when they ask themselves, “Should I Buy or Lease?”!

There are, of course, pros and cons to each:

Buying a Van:

The Pros:

• You own the vehicle outright, so there are no restrictions on mileage or wear and tear.
• Once paid off, ownership lowers long-term costs.
• You can sell the van and recoup some costs later.

The Cons:

• Upfront costs are much higher, which can strain cash flow.
• You bear full responsibility for maintenance, repairs, and depreciation.
• Vehicles lose value over time, and older vans can become costly to run.

Leasing a Van:

The Pros:

• Lower initial costs and predictable monthly payments.
• Many lease agreements include maintenance packages, reducing unexpected expenses.
• Allows access to newer, more fuel-efficient vehicles.

The Cons:

• Mileage limits and wear-and-tear clauses can result in extra fees.
• You never own the vehicle, so there’s no asset to sell later.
• Long-term leasing can be more expensive than buying.

Cost-Effective Ways to Run a Van

Managing a works van brings with it business costs. But there are some ways you can manage these.

Fuel Efficiency:

Older vans cost more to run… So, if and when cash flow allows, consider upgrading to a more fuel-efficient or hybrid vehicle to reduce long-term costs.

Insurance Tips:

Shop around for fleet insurance or policies tailored to tradespeople for better deals. Some providers will take driver behaviour and training into account. You may get discounts if you provide regular driver training or promote safe driving within your company.

If you have just one work van but also take insurance for your private car, look for a company that will insure both with a discount.

Regular Maintenance:

Vans out of action mean lost revenue when you can’t get to jobs. So, regular maintenance is essential. Taking out a service plan with a dealer you can trust may prove to be one of the wisest investments you make, enabling you to spread the payments of any service costs, often at a pre-agreed price that won’t fluctuate.

Tax Reliefs & Grants:

Take advantage of the Annual Investment Allowance (AIA), which allows businesses to deduct the full cost of certain assets (like vans) from their taxable profit.

If you’re thinking of switching to electric, you can apply for government grants to help with the cost of switching, such as the Plug-In Van Grant. This covers up to 35% of the purchase price (capped at £5,000 for smaller vans).

We hope you’ve found this article helpful. Managing a work van can be complex, especially if you operate a business with multiple vehicles. We recommend you always seek advice from your bookkeeper and accountant about claiming expenses and taking advantage of Government grants and incentives.