Van leasing is very popular in the UK, and has the potential to benefit companies all over the world.
Van leasing is beneficial to people who are self-employed, for businesses, and private users who may not be able to buy a van outright. Leasing a van is specifically valuable to businesses and the self-employed because, if leased as a van contract hire, there are tax benefits associated with it.
So, what does it mean to have a van contract hire or to choose van leasing for business purposes? When a person has a van contract hire, payments include a nominal monthly fee and initial deposit, usually about three months' rent. The van can be used as often as necessary. One common option in van leasing is a finance lease. A finance lease is classified as a hire agreement. As such, there are taxes associated with it, and therefore tax benefits associated with it.
One place where people who participate in van leasing will reap
benefits, is through VAT (Value Added Tax) payments. A VAT is a tax on
profits used for supplies or services that are either directly or
indirectly sold to end-users. In the case of van leasing, it is usually
added to the monthly rent. If the vehicle is registered, the tax can be
reclaimed each quarter. It is also required that the van be sold at the
end of the lease term.
It is important not to end the contract before it reaches the term agreement. If a person does so, an early settlement fee is charged. There is some good news, however, a finance lease is very flexible. The person who has been on the receiving end of van leasing is able to sell the vehicle to a third party. If the van is sold to a third person, the profit can be kept and used toward a final payment. Bear in mind that the profit is taxable.
Many van leasing companies, including Ford, also offer a part exchange option. Part exchange means that the old van can be used to buy a new van. The new company will ask for a settlement figure to determine your deposit. If your settlement value is lower than market value, the difference can be used toward the deposit, either in full or in part. However, if the figure is higher than the market value, it can be added to the overall finance agreement, but the deposit must be paid in full.
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