Demystifying van expenses for sole traders

As a sole trader, vans are an essential tool for your business.

Managing the costs and benefits of owning or leasing a van involves understanding key expense considerations, rather than tax liabilities like Benefit in Kind (BiK), which do not apply to sole traders.

So, what should you know about business van expenses as a sole trader?

• Private use – While you can claim the business proportion of van-related costs (such as fuel, insurance, and maintenance), any personal use—like school runs or weekend trips—must be excluded from your expense claims.
• Incidental private use – Minor personal uses, such as stopping for coffee on the way to a job, are typically considered part of business use and do not need to be excluded from claims.
• Van classification by HM Revenue & Customs (HMRC) – For expense claims, HMRC defines a van as a vehicle primarily designed to carry goods, weighing no more than 3,500kg. This classification is crucial for ensuring your vehicle qualifies for relevant tax reliefs.

Electric vans

• Zero emissions benefits – Electric vans often come with lower running costs, exemptions from certain charges (like the Ultra Low Emission Zone), and grants like the Plug-in Van Grant to reduce upfront costs. Sole traders can also claim the cost of an electric van through allowances such as the Annual Investment Allowance (AIA).

Maximising financial relief

• Leasing – If you lease a van, the costs can be claimed as a business expense, reducing your taxable income.
• Purchasing – Buying a van allows you to claim the cost through capital allowances, such as the AIA, offering immediate financial relief against your profits.

Managing van costs efficiently

• Track usage – Keep detailed records of business and private mileage to ensure you claim the correct proportion of expenses.
• Limit personal use – Minimising private use helps maximise the business portion of your expense claims.

Owning a van as a sole trader is about effectively managing costs and making the most of financial reliefs available.

For personalised advice on managing your van expenses, contact our team of experts today.