Leasing a van

[atec]

Does anyone on here lease a van rather than buy or does any one know if it would be a better option to buying.

[faithhealer]

Thought about that one myself but vans are so cheap these days! and leasing ties you up for 12 months min.

[Dave]

There are benefits from both angles....pm grumps and he can tell you what is what...

[doit4u]

You need to look at the costs carefully and the terms of the lease and what it includes. Remember they want to make a profit. It also depends on the sort of mileage you are likely to cover and what image you want. Personally I don't do a lot of miles so as long as the van looks reasonable I am not fussed on speed or having some thing posh.

My last van was a Bedford Rascal that cost £595 to buy and ran for nearly 2 years and I spent about £200 on it and still got £200 as a non runner for spares.

Just bought a tidy V reg LDV pilot with 60K on the clock for £1150. Providing I don't have to spend to much on it, it had new exhaust, power steering pump, cam belt and full service in the last 6 months {over £800 spent} so should be good for a while. Its a bit slow and noisy but gets me there.

The way I look at it is if I had to scrap it in 4 years I have lost about £300 a year in depreciation. If you buy something newish, say K£5 -10 you would probably loose £1150 in the first year.

[faithhealer]

can't have a lease van 'signed up' either

[Sully]

Talk with your accountant as your individual circumstances will dictate but in a nutshell when it comes to the tax side, you get full tax relief on a lease, you get partial tax release on an outright purchase. A lease van comes with a warranty, not always the case with a 2nd hand purchase, so no unforseen bills to deal with. A leased van loses big value when you drive it off the forecourt, but that only matters if you intend to keep it as opposed to handing it back.

[Sully]

can't have a lease van 'signed up' either

Yes you can - I lease

[TilingLogistics]

Leasing is generally not a good idea for most. I am not saying don't do it but it is a fixed expense around your neck for a period of time and the less you have of these the better. It is generally better to start off with something you can buy outright and then get something better after say 18 months rather than just jumping in the deep end. In addition a lease sometimes requires an up front payment and a final settlement.

Kev

[TilingLogistics]

Yes you can - I lease

You surprise me Andrew

Kev

[Sully]

You surprise me Andrew

Kev

Why's that?

[Dave]

can't have a lease van 'signed up' either

I know a few peeps who have lease vans and they have them signed up...

[Sully]

Does anyone on here lease a van rather than buy or does any one know if it would be a better option to buying.

Back to the original question abouting leasing. I assume that you want a new van if considering leasing. Are you buying in cash or is it a credit option? Look at the following figures which are rough calculations:

Purchase price £15,000

Hire Purchase Option

Deposit £3,000 with 48 payments of £300 to follow charging you an extra £2400 in interest. Total cost of van: £17,400. The tax relief on these payments reduce year by year. I think it's 40% in year one, 25% in years 2 and 3.

Lease Option

Deposit £1,500 with 48 payments of £250. Initial and monthly payments are generally lower. At the end of the term you can hand back the van and be left with nothing or pay approx £6000 (on a £15k figure) and purchase outright. If you went the purchase route, the £15k van would have cost you slightly more than the HP option but your initial outlay is lower, monthly payments are lower and if after 4 years you like the idea of either keeping the van or getting a new one under your ass, the options are open. Critically, the leasing option offers 100% tax relief on your monthly payments so tax wise is better.

Each situation is different but to say that leasing is generally not a good idea for most is incorrect IMO. Fixed expenses with no worries about unforseen garage fees due to the warranty that a new van holds, can actually be a positive thing. You do your budgets and there are no surprises along the way. Speak with a retailer and get both HP and leasing figures and take these to your accountant for solid advise. I should think if you want to buy new, the buyer holds the trump card at this time.

Good second hand vans are also a good idea but don't expect too many tax benefits.

Andrew

[Wylie]

if you get a magnetic sign made up simply slap it on

[atec]

cheers sully makes sence, will visit a couple of commercial van places and enquire will also chat to accountant, the tax relief balances it all out, the lease option seems good to me, i will get onto the sums. another question does a lease van come with insurance or am i asking for to much

[whitebeam]

Dose it come with insurance as well

[atec]

have to try

[Sully]

cheers sully makes sence, will visit a couple of commercial van places and enquire will also chat to accountant, the tax relief balances it all out, the lease option seems good to me, i will get onto the sums. another question does a lease van come with insurance or am i asking for to much

No, I'm afraid not but again, you might just be able to strike a hard bargain and at least get a tank of diesel, seat covers or maybe even the sign writing paid for . I dismissed leasing initially but on a new van, the figures might just add up in your favour. It's often described as a 'rental' but depending on what way you look at it, it can also become a 'purchase'. Talk with the leasing companies make sure you are looking at an option to buy at the end - then compare the 'hp' figures against a 'lease purchase' option with an accountant. Finally, don't jump staright in to a 'special' offer option with say a low initial deposit - like 'credit card specials', these are often not the best option as they might hot you with a mileage limit or higher final payment later. Simply add up the down payment, monthly payments and final payment option to see the true price.

Good luck!

Andrew

[grumpygrouter]

Talk with your accountant as your individual circumstances will dictate but in a nutshell when it comes to the tax side, you get full tax relief on a lease, you get partial tax release on an outright purchase. A lease van comes with a warranty, not always the case with a 2nd hand purchase, so no unforseen bills to deal with. A leased van loses big value when you drive it off the forecourt, but that only matters if you intend to keep it as opposed to handing it back.

Not true!

[grumpygrouter]

Back to the original question abouting leasing. I assume that you want a new van if considering leasing. Are you buying in cash or is it a credit option? Look at the following figures which are rough calculations:

Purchase price £15,000

Hire Purchase Option

Deposit £3,000 with 48 payments of £300 to follow charging you an extra £2400 in interest. Total cost of van: £17,400. The tax relief on these payments reduce year by year. I think it's 40% in year one, 25% in years 2 and 3.

Lease Option

Deposit £1,500 with 48 payments of £250. Initial and monthly payments are generally lower. At the end of the term you can hand back the van and be left with nothing or pay approx £6000 (on a £15k figure) and purchase outright. If you went the purchase route, the £15k van would have cost you slightly more than the HP option but your initial outlay is lower, monthly payments are lower and if after 4 years you like the idea of either keeping the van or getting a new one under your ass, the options are open. Critically, the leasing option offers 100% tax relief on your monthly payments so tax wise is better.

Each situation is different but to say that leasing is generally not a good idea for most is incorrect IMO. Fixed expenses with no worries about unforseen garage fees due to the warranty that a new van holds, can actually be a positive thing. You do your budgets and there are no surprises along the way. Speak with a retailer and get both HP and leasing figures and take these to your accountant for solid advise. I should think if you want to buy new, the buyer holds the trump card at this time.

Good second hand vans are also a good idea but don't expect too many tax benefits.

Andrew

Again, not true. the example given here would be classed as effectively the same way as hire purchase in agreed Accounting Standards and HMRC as it is classed as a finance lease. The vehicle at the end of the "lease" term would need to be sold to an independent 3rd party.

The only way to have finance payments that are fully tax deductible the way describes is to have an "Operating Lease" or "Contract Hire". In both these cases, the lessee or hire NEVER has ownership of the vehicle. The lease contract would also need to be very clear that it is an Operating Lease not a finance lease.

Tax relief on vans is 100% which ever way it is finance, it just differs in the way it is charged through!

[Sully]

Again, not true. the example given here would be classed as effectively the same way as hire purchase in agreed Accounting Standards and HMRC as it is classed as a finance lease. The vehicle at the end of the "lease" term would need to be sold to an independent 3rd party.

The only way to have finance payments that are fully tax deductible the way describes is to have an "Operating Lease" or "Contract Hire". In both these cases, the lessee or hire NEVER has ownership of the vehicle. The lease contract would also need to be very clear that it is an Operating Lease not a finance lease.

Tax relief on vans is 100% which ever way it is finance, it just differs in the way it is charged through!

You may be an accountant come tiler but I'm afraid I have to disagee. Have you leased a van? I have and I have an option to purchase or hand back and a purchase option doesn't offer the same tax relief according to both my account and HMRC (who I double checked with). Maybe my use of 'fully tax deductable' is incorrect but it is certainly more attractive than a purchase option. Maybe they made a mistake with me but the contract is sitting here in front of me and looks genuine

Be interesting how you might explain it. Lets take a £15,000 van (ignoring vat) over 4 years. What's your advice?

Conflicting views here - speak with your accountant Atec and report back.

[TilingLogistics]

Andrew,

It´s not quite as easy as the way you have put it. Lets remember as well you need to be making a decent profit as well before you can claim the relief. This subject is a lot more complicated than people think. I spent months learning this in another life and I am sure a lot of the rules I learnt then have changed so I am not prepared to comment other than to say it needs to be reasearched thoroughly. In my case a good quality little used reliable second hand van purchased outright is unbeatable by finance of any description.

Kev

[Sully]

Who said it was easy? Spelling out approximate (but probably realistic) figures of £250 - £300 per month certainly isn't misleading anyone into believing that it is easy. Atec came on here for advice with regards to leasing - I think I was correct in advising him new van figures as I have done. I repeatedly advised him to do some footwork and speak with his accountant while also giving him an illustration which after his research - I'm pretty sure he will confirm was realistic. You on the other hand are basing your advice (or lack of it) on your own personal opinion (In my case a good quality little used reliable second hand van purchased outright is unbeatable by finance of any description), forgetting to point out that he'll need to stump up some hard cash to get a 'little used van'. Secondly your former life isn't quite September 2008 when I did my research with leasing companies, retailers, my accountant and HMRC. I'm not going to post the details of my own specific circumstances on here but on this subject, I am well qualified (and certainly more qualified than you) to offer advice.

Yes it is complex but I think if you read back through this thread, I have offered the most useful advice. Critisised by two of of you, yet neither of you have any constructive advice to offer. I think you'll find from reading any of my posts - I only give advice from personal experience. I decline from offering advice on hearsay / something I have read in a book / on the net and I'd like to think that makes for a more positive contribution.

Andrew

[grumpygrouter]

Hi Sully, here is the information regarding accounting for Leases and Hire purchase transactions. it is important to distinguish between what is construed as an "Operating Lease" and a "Finance Lease". Basically, any contract that results in the lessee having ownership at the end of the "term" is classed as a finance lease. As such it should be capitalised in the balance sheet of the accounts. In an operating lease, the lessee never owns the asset. There is usually what is called a "primary lease period" and then a "secondary lease period". The primary period is the normal contract payable over, say, 3 years. At the end of the term, the lessee is then given the option to retain use of the asset (secondary lease period) for what is effectively a nominal fee, usually equivalent to 1 months rental per year. If this option is not taken then the asset is returned to the Lessor.

http://www.frc.org.uk/images/uploade...21%20cover.pdf


As for me critising you (mentioned in your reply to Tilinglogistics), that was not true. I stated that what you said was not correct and my statement is backed up by SSAP 21. I was not critising you,merely stating you had made a factual error. Any input to the forums which promotes healthy debate is good and most welcome.

As for which way is most beneficial taxation wise, that would depend entirely on the individual circumstances of the person/organisation looking to take out the contract.

Finally, to your comment about offering advice ->

neither of you have any constructive advice to offer

.

I have offered this very advice on a number of occasions previously in the forums, both publically and by PM. Anyone interested in my responses only has to do a search of the forums to find the answer.

[Sully]

Now that's very useful advice, and I'm grateful that it eventually came through - I'm sure it will be of use to Atec. I don't actually need to read it, but thanks anyway! I've also no doubt that 9 out of 10 queries posted today have been made before - the forum would be a boring place if the reply to latest queries was - 'do a search, it's been discussed before'.

As for your comments to me - you simply stated 'not true' in your initial posts, maybe your choice of words should be considered as I'm sure you wouldn't intend to call anyone a liar. I still stand by my advice - a simple and accurate description of leasing against hp, with a prompt to do further research.