The FleetPro Blog: Tax Relief For Leased Company Vans

Tax Relief For Leased Company Vans

1 July 2020

Tax relief for leased business vans is based on the business's accounting treatment of rentals.

Rentals Basis:

Where the cost of lease/hire rentals charged to the accounts each year is based upon the actual rentals paid then the tax relief is usually also based on the rentals paid during the accounting year.

If rental payments are abnormally loaded into an accounting year (for example, if all the rentals for the entire lease period are paid in the first accounting year, or a large deposit is paid as advance rentals) then an adjustment is required to spread the rentals over the entire hire/lease period.

Depreciation and Finance Charges Basis:

Where lease or hire rentals are split into depreciation and finance charges for accounting purposes the tax relief can be based on depreciation under the capital allowances rules, with a separate tax deduction for the finance charges implicit in the lease rentals (this is an approach used by some larger companies to follow accounting conventions for leased assets).

Self-employed

For the self-employed where the vehicle is used partly for non-business purposes, tax relief is apportioned according to the ratio of annual business miles to total annual miles.