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Generally speaking businesses that are registered for VAT cannot reclaim when they purchase a car. In the majority of cases they can, however, reclaim VAT when they buy a commercial vehicle.

A commercial vehicle is any that has a payload of one tonne or more, or else an unladen weight of three tonnes.

Whilst it usually easy to distinguish a car from a van, there are some vehicles that seem to bridge the two genres and cannot be so easily categorised. Such vehicles would usually include car-derived vans, combination vans and combi vans. So as to avoid any doubt, H.M. Revenue and Customs has strict classification criteria for each.

A car, of course, is not always in private ownership. Many employees give their employees the sole use of a company car for the duration of their employment. The vehicle is for the exclusive use of the employee, but remains the property of the company.

It differs from a commercial vehicle in that it is not actually “working” for the company, but rather is a perk provided to a valued employee.

Any company which, as part of its operation, transports objects to or from its base, or between any other points, is likely to consider acquiring one or more vans. Usually a van is a vehicle comprising a cabin at the front for the driver and a passenger, and a larger enclosed space behind for the physical movement of goods.

Like any motor vehicle, a van may be purchased outright or through a staggered finance arrangement. Although van finance obviously incurs interest it might be advantageous for a small company in particular to opt for the finance route in order to steady cash flow. If costly assets such as commercial vehicles are purchased outright before the company has had a chance to generate much income it could have the effect of fatally inhibiting its ability to do so.

The other big advantage with taking out van finance is that finance leasing is considered to be a hire agreement, even where the option exists to take ownership of the van at the end of the lease period, and is therefore entirely tax deductible. Sole traders and small businesses in general can enjoy massive tax benefits whilst not having to commit to a heavy frontloaded outlay.

It is for these reasons primarily that van finance is the preferred option of many small to medium sized businesses and especially in the early stages when resources are in short supply and ideally needed elsewhere within the operation.

Compare a variety of van finance options online at the above van finance quote comparison sites and get the best van finance deal for you today. Whilst you are looking to finance your van, you may also wish to look at a cheap van insurance quote by clicking here.

 
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