Over the last decade, the number of small businesses has risen noticeably. There are now more self-employed workers than ever before and as a result, the number of vans being bought is increasing too. But if you’ve made the decision to purchase a new or used van, whether as the first vehicle in the company or to add to your existing fleet, there are a few tips to keep you safe.
Which van should I get?
One of the fastest growing segments on the market are city vans, such as the Peugeot Partner and Mercedes-Benz Citan. These vans are increasingly popular thanks to their surprisingly large payload, including Euro Pallet compatibility, whilst being an enjoyable vehicle to drive. For urban businesses these are nimble, economical vans which can cater to most needs and have strong residual values.
When you’ve got more cargo or more miles to cover, a medium or panel van might be better suited. The Ford Transit, Vauxhall Vivaro and Volkswagen Transporter are recognisable examples of this type of van and have the ability to carry more equipment, or even more people with the double-cab configuration.
In the last few years, electric vehicles have been at the forefront of conversation surrounding climate change. Thanks to the like of Tesla and Nissan, who dominate the electric car market throughout Europe, there is growing infrastructure for electric vehicles. Unsurprisingly, manufacturers have also released electric vans which slash emissions and even provide a quieter, smoother and faster drive. Throughout 2019, the Citroen Berlingo, Nissan e-NV200 and Renault Kangoo ZE have had successful sales cementing electric’s place in the commercial vehicle market.
How should I pay for it?
After you’ve made the decision to buy a van, and picked which van suits you best, the next choice is how to pay for it. For businesses that are VAT-registered, the most common finance method is contract hire. Business contract hire is a lease agreement, similar to short-term rentals, which enables businesses to use a van for fixed monthly payments. Vans are leased for a set length, usually two to five years, and there are pre-agreed mileage limits. At the end of the agreement, as long as the van is within the wear and tear policy and mileage limit, the business returns it to the finance company with nothing else owing.
Alternatively, businesses can use hire purchase, which splits the cost of the van over a set term into fixed payments with interest. At the end of the agreement, the business pays a nominal purchase fee to own the van outright, meaning it’s a good option for companies wanting to use the van for longer than the finance agreement.
What should I look out for?
If you’ve found a van that fits your needs and decided on a finance option that suits, then you’ll be wanting to protect your purchase and ensure that the vehicle is in good condition. It’s worthwhile having a visual inspection, checking the bodywork for any rust, dents and scratches. The tyres should also have a continuous band of 1.6mm of tread. If the van is on contract hire, it’s especially important to note any damage before you take delivery as you could be charged for this on its return.
On used vans, the mechanics and electronics are worth taking a look at. Take it for a test drive and listen for any signs that there’s a mechanical fault, including testing the brakes. At the end of the test drive, asses the instrument panel for any warning lights and check the windows, wipers and entertainment system.
The van should have accompanying paperwork to record any MOT’s or services that it’s had and it’s always worth performing an HPI check to see if there is any outstanding finance.
Is it tax-deductible?
As mentioned, contract hire is one of the most popular ways of businesses to fund vans. If the business is VAT-registered, the monthly payments which attract VAT are deductible from their returns. In addition to this, the monthly payments are also deductible from corporation tax, meaning that the entire cost of the van could be offset, provided it’s being used solely for business purposes. The other finance products, including hire purchase and contract purchase have different tax implications depending on the use and company purchasing, including whether it’s listed as a liability on your balance sheet. Before deciding on your next van it’s worth checking with an accountant or speaking with a finance broker.