Your van is a tool. If you're a sparky, a plumber, a chippy or a groundworker, it's probably the most expensive tool you own, and the way you pay for it changes how much tax you hand over.
This guide is for sole traders and self-employed tradespeople who use a van for work. We'll walk through how to claim it whether you buy it outright, finance it or lease it, the difference between the simplified mileage method and claiming actual costs, and the one mistake we see most often on tax returns.
No jargon dumps. Just the rules that decide what you can knock off your profit, with the current figures for the 2025/26 tax year.
<a id="is-a-van-tax-deductible"></a>Is a van tax deductible if I'm self-employed?
Yes. A van you use for your business is an allowable expense, so its cost reduces the profit you pay tax on. HMRC lists vehicles among the things the self-employed can claim, including the running costs and the cost of the vehicle itself.
The important word is "business". If you use the van privately as well, for the school run or the weekly shop, you can only claim the business proportion. Most tradespeople with a dedicated work van have a high business-use percentage, but you still need to be honest about any private mileage.
There are two broad ways to claim, and you generally pick one per vehicle:
- Simplified expenses (the flat mileage rate) - you claim a set amount per business mile and forget about fuel, servicing, insurance and the rest.
- Actual costs plus capital allowances - you claim the real running costs, plus a deduction for the cost of the van itself.
You can't do both on the same van. Which one wins depends on how much the van cost and how many miles you do.
<a id="mileage-or-actual-costs"></a>Should I claim mileage or actual running costs?
The flat mileage rate is the simpler route. You keep a log of business miles and multiply by the rate. You don't keep fuel receipts, and you don't claim the cost of the van separately, because the flat rate is designed to cover everything, including wear and tear.
Claiming actual costs is more admin but often more generous, especially in the year you buy the van. You add up the real running costs (fuel, insurance, repairs, road tax, breakdown cover), apply your business-use percentage, and then claim capital allowances for the van itself.
Two rules to keep straight:
- Once you use the flat mileage rate for a particular vehicle, you have to keep using it for as long as you use that vehicle for the business. You can't flip back and forth year to year.
- You can't use simplified mileage for a van you've already claimed capital allowances on, or one you've already put through as a business expense.
So the choice is usually made in year one. Low-cost, high-mileage van? Mileage often wins. Expensive van, or you want the big deduction up front? Actual costs and capital allowances usually win.
<a id="simplified-mileage-rates"></a>What are the simplified mileage rates for a van?
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For tax purposes, a van counts the same as a car under the simplified mileage scheme. The flat rates are:
| Vehicle | First 10,000 business miles a year | Each business mile after 10,000 |
|---|---|---|
| Cars and goods vehicles (vans) | 45p | 25p |
| Motorcycles | 24p | 24p |
Source: gov.uk simplified expenses for vehicles. These are the rates for 2025/26 (before 6 April 2026). From 6 April 2026 the first-10,000-mile rate for cars and goods vehicles rises to 55p; the rate after 10,000 miles stays at 25p.
So if you drive 12,000 business miles in a year, you'd claim 10,000 at 45p (£4,500) plus 2,000 at 25p (£500), a total of £5,000. That £5,000 comes straight off your taxable profit.
Remember, the flat rate already covers fuel, repairs, servicing and depreciation. You can't also claim those costs or capital allowances on top. You can still claim genuinely separate things like parking and toll charges incurred for business.
<a id="capital-allowances-buying"></a>How do capital allowances work when I buy a van?
This is where vans get a much better deal than cars, and it's worth understanding properly.
Cars are restricted. The rate you can claim depends on the car's CO2 emissions, and cars do not qualify for the Annual Investment Allowance. Vans are different. For capital allowances, lorries, vans and trucks are not treated as "cars", so a van is treated as ordinary plant and machinery.
That means a van qualifies for the Annual Investment Allowance (AIA), which lets you deduct the full cost in the year you buy it, up to £1,000,000 a year for 2025/26. For almost any tradesperson buying a single van, the whole purchase price falls comfortably inside that limit.
In plain terms: buy a £24,000 van that you use only for work, and you can usually deduct the full £24,000 from your profit in that year. If you use it 90% for business and 10% privately, you deduct 90%, so £21,600.
A few things to watch:
- If you account on the cash basis (now the standard method for most sole traders), you generally just deduct the cost of the van as a normal expense when you pay for it, rather than formally claiming capital allowances. The effect is similar: the business cost comes off your profit. Cars are the exception and are still handled through capital allowances.
- If you bought the van on hire purchase or van finance, you can still claim capital allowances on the full cash price once the van is in use, and the interest part of your finance payments is a separate allowable expense.
- Claim the deduction once. You're writing off the cost of the van, so you don't also get to claim mileage on the same vehicle.
For a quick estimate of what a deduction is worth against your own profit, our self-employed tax calculator is a good starting point.
<a id="buying-or-leasing"></a>Is buying or leasing a van better for tax?
Both can be tax-efficient. They just give you the relief at different times.
Buying (outright or on finance). You claim the cost of the van itself, usually in full in the year of purchase via the AIA (or as a cash-basis expense). That's a big one-off deduction. You own the asset, and when you eventually sell it the sale proceeds are brought back into your accounts.
Leasing (contract hire / operating lease). You don't own the van, so there's no capital allowance. Instead, the lease rentals are an allowable business expense, spread across the term. You deduct each payment (adjusted for any private use) as you pay it. Unlike with car leasing, there's no flat-rate disallowance of part of the rental for a commercial van.
| Factor | Buying the van | Leasing the van |
|---|---|---|
| When you get the relief | Mostly up front, year of purchase (AIA) | Spread over the lease, as you pay |
| What you claim | Cost of the van (capital allowance or cash-basis expense) | The monthly rentals |
| Do you own it? | Yes | No |
| Big deduction in year one? | Usually yes | No, it's spread |
| Sale/disposal to account for later? | Yes | No |
There's no universal winner. If you want to cut this year's tax bill hard, buying and claiming the AIA is powerful. If you'd rather smooth the cost and keep cash free, leasing spreads the relief. Cash flow, how long you'll keep the van, and your profit level all feed into it. This is exactly the sort of timing decision our tax advisory team helps tradespeople get right.
<a id="illustrative-example"></a>Illustrative example: claiming a £24,000 van
Illustrative example. Tom is a self-employed electrician trading as a sole trader. In 2025/26 his profit before any van claim is £45,000. In June 2025 he buys a van for £24,000 and uses it 90% for business, 10% privately.
He claims the Annual Investment Allowance on the business share:
- £24,000 x 90% business use = £21,600 deducted from his profit.
- Profit after the van claim: £45,000 - £21,600 = £23,400.
What's that deduction worth in tax? Tom stays a basic-rate taxpayer throughout (his profit sits well below the £50,270 higher-rate threshold both before and after the claim). On profit in this band he pays 20% Income Tax plus 6% Class 4 National Insurance, a combined 26% for 2025/26.
- £21,600 x 26% = £5,616 saved in Income Tax and Class 4 NIC for the year.
The 2025/26 figures behind that: the basic rate of 20%, the Class 4 main rate of 6%, and the Annual Investment Allowance of up to £1,000,000.
Now compare the mileage method. Say Tom instead does 12,000 business miles a year. He'd claim 10,000 x 45p (£4,500) plus 2,000 x 25p (£500) = £5,000 a year. That's a steady annual deduction, but he can't also claim the £21,600 for the van, because the flat rate covers the vehicle. For a £24,000 van, claiming the actual cost gives Tom a far bigger deduction in year one. For a cheap, high-mileage runaround, the mileage method might suit better.
This is illustrative only. Your own figures, business-use percentage and tax band will change the numbers.
<a id="decision-guide"></a>How do I decide? A quick decision guide
A rough way to think it through:
- Is private use minimal and the van cheap, but your mileage high? Lean towards the simplified mileage rate. Less admin, decent annual deduction, no need to track every receipt.
- Did you pay real money for an expensive van and want to cut tax now? Buy it and claim the cost (AIA on traditional accounting, or as a cash-basis expense). Biggest deduction up front.
- Want to protect cash flow and change vans every few years? Leasing spreads the relief and keeps capital free, with the rentals fully allowable for a commercial van.
- Mixed personal use? Whatever route you pick, apply your honest business-use percentage. HMRC expects a reasonable basis, so keep a mileage log to back it up.
Whatever you choose, keep records: purchase invoice or lease agreement, finance documents, fuel and repair receipts (if claiming actual costs), and a mileage log. Good records are what turn a sensible claim into a defensible one.
Want to claim your van the most tax-efficient way? Zmartly works with electricians, plumbers and construction trades day in, day out. Book a free 20-minute call with a Zmartly accountant and we'll tell you whether to buy, lease or claim mileage for your van, then handle the Self Assessment so it's done right.
<a id="faqs"></a>FAQs
Can I claim the full cost of my van in one year?
Usually yes, if you buy it and use traditional accounting, because a van qualifies for the Annual Investment Allowance, which lets you deduct the full cost in the year of purchase (up to £1,000,000 for 2025/26). If you use the cash basis, you generally just deduct the cost as a normal business expense when you pay. You reduce the claim by any private-use proportion.
Is a van treated the same as a car for tax?
No, and it works in your favour. For capital allowances, vans are not treated as cars, so they qualify for the Annual Investment Allowance and avoid the CO2-based restrictions that apply to cars. Under the simplified mileage scheme, though, a van uses the same flat rate as a car (45p for the first 10,000 business miles in 2025/26, 25p after).
Can I claim mileage and the cost of the van?
No. The flat mileage rate is designed to cover the running costs and the cost of the vehicle, including wear and tear. If you claim the flat rate, you can't also claim capital allowances or actual running costs on the same van. You pick one method per vehicle.
Is van finance tax deductible?
If you buy a van on hire purchase or finance, you can claim capital allowances on the full cash price once the van is in use, and the interest element of your finance payments is a separate allowable expense. The capital repayments themselves aren't an extra deduction, because you're already claiming the cost of the van.
What if I use my van for personal trips too?
You can only claim the business share. Work out a fair business-use percentage and apply it to your van costs or capital allowance. A mileage log is the simplest way to evidence it if HMRC ever asks.
<a id="sources"></a>Sources
- Expenses if you're self-employed: car, van and travel expenses (gov.uk)
- Simplified expenses if you're self-employed: vehicles (gov.uk)
- Capital allowances: business cars and vehicles (gov.uk)
- Annual Investment Allowance (gov.uk)
- Cash basis (gov.uk)
- Income Tax rates and bands (gov.uk)
- Self-employed National Insurance rates (gov.uk)
