If you own your own business then you may find yourself in a bit of a dilemma about whether or not that you should hire a business vehicle or to purchase a vehicle. Like everything in business, it all boils down to the tax benefits and unlike the regular person in the street who buys a car for general everyday use, you will be using your commercial vehicle for business purposes and so you should be able to claim expenses when it comes to your taxes. In every situation, it makes sense to talk to your business accountant first.
If it is your intention to take out a commercial vehicle loan to buy a van or car in the first place, then this can provide you with a number of benefits. The following are just some of those.
- The running costs – Any money that you spend on the commercial vehicle for such things as fuel, insurance and tax will all qualify as a business expense and so you can claim this money back when you submit your accounts for tax.
- Depreciation – It is likely that the commercial vehicle will reduce in value the more you use it and the older that it gets, so this is depreciation that you can also claim for because the commercial vehicle will be seen as a company asset. The procedure itself is a little bit difficult so make sure that you talk to the company accountant who can do all of the work for you when it comes to claiming appreciation.
- Other things – There are other tax benefits when it comes to taking out a commercial vehicle loan to purchase a company car or van. You can get help with the insurance that needs to be paid on the commercial vehicle long and should the vehicle be involved in any kind of road traffic accident then you can claim the cost of the repairers as well.
If you were to decide to hire a vehicle for commercial use then you would miss out on many of the above benefits, so it makes perfect sense to talk to your lending institution to make sure that they can provide you the commercial vehicle loan. The key is to use the company vehicle for as much business use as possible so that you can claim more of your monthly repayments back as a totally deductible expense.