If you’re self-employed or run your own company, the decision between choosing a van or a car for your next business vehicle can easily become a laborious and confusing chore, especially when bearing in mind that your choice of vehicle will be critical to the efficiency of your business. Your business vehicle should therefore always be treated as an asset, and that’s why we’ve compiled this easy to follow guide to assist you in your decision process, whether you’re looking to buy or to lease.
Let’s take a look at the figures
If your business is small or only just starting up, the likelihood is that you’ll be desperate for ways that you can save some money. If this is the case, you might think that investing in a car is the cheapest option, but more often than not, you’ll save more by opting for a van, and this is particularly pertinent if you choose to lease. The facts are that nearly one-third of SME directors believe that their company will not benefit from vehicle leasing; 43% of them believing leasing to be too expensive, 8% thinking it is easier to own a vehicle and 6% believing they will not be able to get the right type of vehicle to suit their needs.
The happy reality is that business owners will reap the tax advantages of driving a van rather than a car. Vans are taxed at a flat rate of £3,170 whereas the amount you’ll be taxed for a car depends on its CO2 emissions. Essentially, this means that van owners pay half the amount of tax as those who own cars. Plus, you’ll benefit from no additional fuel charge so a driver can cover unlimited mileage with all costs covered by the employer and in turn, the employer will benefit from a reduction in National Insurance. This is why the first step toward choosing your vehicle will be to establish exactly who it is that will be driving it as insurance rates can vary significantly between you and your employees, affecting the overall costs of liability and exposure.
Different possibilities can be overwhelming
Of course, the type of vehicle you opt for will all depend on the type of business you’re running. However, the additional confusion comes with the fact that many companies now offer vehicles that combine the comfort and convenience of a car with the practicality of a van. So, when choosing which one to go for it’s essential to make an accurate distinction between a car and a van. In a general sense, to qualify as a van, the vehicle must be constructed to transport goods or burden of any description (not human beings), be of a weight that does not exceed 3,500kg and have more than two wheels. A light commercial van might be the most economical option for some companies and will offer you the flexibility of car-like handling. However, if you require a vehicle to carry around heavy duty goods, then a robust and strong performing van will undoubtedly be a better option. The same goes for businesses that need to clock up thousands of motorway miles each year compared to those who only need to make short journeys throughout their local area. At the end of the day, it all depends on deciding exactly what is right for you but it is still important to note that a vehicle that falls outside the definition of both a van and a car might lead to further tax consequences.
To buy or not to buy?
For business owners, another important choice to make is whether or not you wish to buy your new vehicle or simply lease it for a period of time. Again, this can all depend on your current situation, but it’s worth bearing in mind that any tax that you pay on a leased vehicle can easily be fully deducted from your profit statement thus saving you more money. In the long run, leasing a van or a car for your company might help you to get it off the ground, but you’ll also need to consider maintenance, repairs, accidents and driver training that will help you to avoid incurring any additional costs throughout the duration of the lease.
Hopefully, our handy guide has cleared up some of the concerns you may have had with choosing between a car or a van for your next business vehicle. Don’t worry if you’re still unsure which way you should commit, however, as professional and experienced insurance companies such as Call Wiser can help you arrange the best deal for you, no matter how exacting your requirements may be.