Your first van as a new business

Updated September 2026 · 12 min read

Your business structure decides the product. Limited companies and LLPs take business contract hire over 24 to 60 months; sole traders are individuals, so their route is short-term rental capped at 89 days.

What should you decide before you look at vans?

Your structure, because it decides what is available to you rather than merely what it costs. A limited company or an LLP is a separate legal person and can take business contract hire on terms of 24 to 60 months — a fixed monthly rental, a mileage allowance set across the contract, vehicle excise duty included, and a van specified for your trade. A sole trader is an individual, and our product for individuals is short-term vehicle rental with a maximum term of 89 days, renewable only by taking out a genuinely new agreement rather than by an automatic rollover. That is not a preference; it follows from what each customer type is. If you are weighing up incorporating anyway, the vehicle question is one input among several — incorporating brings annual accounts, corporation tax, a confirmation statement and director duties with it, and whether that suits you is a question for your accountant rather than a van decision.

What does incorporating actually cost and involve?

Less money than most people expect and more admin. Registering a company with Companies House costs £100 online, or £124 by paper, and the annual confirmation statement is £50 filed online (gov.uk, Companies House fees, updated 2 July 2026) — the online incorporation fee rose from £50 on 1 February 2026, so older guides quoting £50 are out of date. Beyond the fee you take on: annual accounts and a corporation tax return, a confirmation statement each year, identity verification requirements for directors, a registered office address that appears on the public record, and the general duties of a director. In exchange you get a separate legal person, limited liability, and access to business contract hire. None of that makes incorporating right for everyone — plenty of sole traders are better off as they are. What it does mean is that the decision is a business one, taken with your accountant, and the van follows it rather than driving it.

Should you register for VAT before you take a van?

Worth a serious conversation, because on a van the numbers are unusually clear. VAT registration is compulsory once taxable turnover exceeds £90,000 in any rolling 12 months, and the deregistration threshold is £88,000 (gov.uk). Below that, registration is voluntary — and the reason it matters here is that a VAT-registered business can normally reclaim 100% of the VAT on a commercial vehicle lease, because there is no automatic input tax block of the kind that applies to cars (HMRC, VAT Notice 700/64). On a van at £350 a month plus VAT, that recovery is not a rounding error over four years. Against it: you must charge VAT to your own customers, which matters a great deal if they are consumers and very little if they are VAT-registered businesses, and you take on quarterly returns and digital record-keeping. It is an accountant's decision, not ours — but ask them the question before you commit to a vehicle. See VAT on van leasing.

Lease, rent or buy for a first vehicle?

Three honest positions. Buying outright gives you total freedom, no mileage limit and an asset — at the cost of spending capital a new business usually needs for stock, tools and the first few months of wages, and taking the whole resale risk yourself. Business contract hire converts the vehicle into one known monthly figure with no disposal risk, includes vehicle excise duty for the term, and lets you take a maintenance package as a separate itemised element; the trade-off is a commitment for the term and a charge if you exit early, which is genuinely expensive (see ending a van lease early). Short-term rental costs more per day and buys flexibility, which is the right answer when the work is genuinely uncertain, when you need a vehicle within days, or when you are an individual rather than a company. The mechanics of each are set out in contract hire vs finance lease.

What does a first van really cost to run?

Budget the whole stack, not the rental. On a leased van, vehicle excise duty is included for the term and the manufacturer's warranty runs alongside it. Everything else is yours: insurance, which for a new business with no trading or claims history is very often the biggest surprise in the first year; fuel or charging; servicing, tyres and MOT unless you take a maintenance package; AdBlue on a modern diesel; racking, ply lining and a bulkhead, which are a real capital cost and eat into payload; livery, and later the cost of removing it; clean-air charges, tolls and parking; and the standing risk of excess mileage if you under-declare. Two further items new businesses forget entirely: the initial rental, which is several months' rental paid at the start, and the cost of making good at hand-back. We quote every element separately, ex-VAT with the VAT-inclusive figure alongside, so nothing arrives later.

How do you size a first van without over-buying?

From the job, in two measurements, not from the class name. Payload is gross vehicle weight minus kerbweight, and it falls as you add racking, ply lining, a roof rack and everything that lives in the van permanently — the only reliable check is to weigh a typical loaded vehicle at a weighbridge. Dimensions decide whether the job fits: maximum load length at floor level, width between the wheel arches (a standard sheet needs at least about 1,220mm and plenty of medium vans do not have it), interior height, and the rear and side door apertures. Remember the licence ceiling: a category B licence covers up to 3,500kg, and since 10 June 2025 up to 4,250kg for zero-emission vehicles. The commonest new-business mistake is buying a size up "to be safe", which costs more every month and can leave you with less payload than a well-specified smaller van. The full method is in choosing van size and payload.

What does a leasing application need from a new company?

Less than most people fear, and having it ready is the difference between a same-day answer and a week of chasing. Expect to provide: the company registration number, director details with three years of address history, business bank statements if the company has been trading long enough to have them, personal bank statements if it has not, and a clear picture of affordability — what the van earns and what else the business is committed to. No filed accounts are needed. Commercial underwriting weighs the business, its directors and affordability rather than looking only for years of history, which is exactly why a company incorporated weeks ago can be considered. Two things come up often enough to flag now: a newly formed company may be asked for a director's guarantee, and may be asked for a larger initial rental. Neither is universal and both are set out in writing before you commit. More at van leasing for a new limited company.

What insurance and legal basics does day one need?

Five things before the van moves. Insurance in the right class of use — business use for carrying your own tools and materials, and hire and reward if you will carry anyone else's goods or passengers for payment, which ordinary business use does not cover. Cover for the load, since a motor policy insures the vehicle and not the tools in it. Employers' liability insurance if you take anyone on, for not less than £5 million (Employers' Liability (Compulsory Insurance) Regulations 1998, regulation 3). Licence checks for anyone else who will drive, using the GOV.UK share service. And a walkaround check habit — lights, tyres, load security, warning lamps — which is basic operator practice. Two dates to diary: the first MOT falls three years after registration, and vans between 3,001kg and 3,500kg need a class 7 test that not every garage can carry out. Detail in van insurance for business.

What do new businesses most often get wrong?

Seven things, in the order we see them. Under-declaring mileage to shave the monthly figure, then paying excess in a lump at exactly the wrong moment. Buying too much van and paying for capability that never gets used. Forgetting insurance is a fixed cost, and a high one in year one. Fitting racking or livery before agreeing it, which turns into a hand-back charge. Assuming a company van is tax-free to the driver — it usually is, but only where private use is insignificant or restricted to ordinary commuting, and unrestricted private use creates a benefit in kind of £4,170 for 2026/27 (gov.uk, published 3 December 2025). Not asking about VAT registration when the reclaim on a van would have covered the cost of asking. And signing personally for a business vehicle, which confuses the tax position and the liability. Every one of them is avoidable with one conversation at the start.

How we handle a first-van enquiry, and what is not advice

Tell us the job rather than the model: the heaviest load on a normal day, the longest item, how many people travel in it, the real annual mileage, whether the work goes into a clean air zone, and when you need it. We come back with two or three genuinely suitable options, quote them in writing with the term, mileage, initial rental, monthly rental and any maintenance element itemised separately — ex-VAT with the inclusive figure alongside — and we aim to give a decision in principle the same working day. If we cannot help, we will tell you honestly and quickly, because a slow no is worse for a new business than a fast one. The tax and VAT points on this page are general information, not tax or legal advice, and rates and thresholds change; confirm your position with your accountant before you commit. Tell us what you need, or browse the van range.

FAQs

Can a brand-new business lease a van?

A newly formed limited company or LLP can be considered for business contract hire with no filed accounts, because underwriting weighs the business, its directors and affordability. A sole trader is an individual, so the route is short-term vehicle rental of up to 89 days rather than a lease.

Should I set up a limited company before getting a van?

It is an accountancy decision rather than a vehicle one, but it does change what is available: business contract hire over 24 to 60 months is for limited companies and LLPs. Incorporating costs £100 online at Companies House and brings accounts, corporation tax and director duties with it.

Should a new business register for VAT to lease a van?

Ask your accountant. Registration is compulsory above £90,000 of taxable turnover in any rolling 12 months, and a VAT-registered business can normally reclaim 100% of the VAT on a van lease. The counterweight is charging VAT to your own customers and taking on quarterly returns.

How much deposit does a new business need for a van?

The initial rental is quoted as a profile such as 6+35 — six months’ rental upfront, then 35 monthly rentals. A newly formed company is sometimes asked for a larger initial rental to offset limited trading history. It is always set out in writing alongside the monthly figure, never introduced later.

Is it cheaper to buy or lease a first van?

Leasing is usually easier on cash flow and more predictable, since you pay for use, road tax is included and you carry no resale risk. Buying keeps the asset and removes mileage limits but spends capital a new business often needs elsewhere. Model both with your accountant over the whole holding period.

What insurance does a new business van need?

Motor cover in the right class of use — business use for your own goods, hire and reward if you carry others’ goods or passengers for payment — plus separate cover for tools or goods in the van, since a motor policy does not insure the load. Employers’ liability applies once you take anyone on.

Will my first company van create a tax charge for me?

Only if it is available for unrestricted private use, in which case the van benefit charge is a flat £4,170 for 2026/27. There is no charge where private use is insignificant or the terms of availability restrict it to ordinary commuting, and a fully electric van carries a nil charge.

Next step

Business van leasing →

How the monthly rental is built, what is included, and who business contract hire is for.

Business van leasing eligibility →

The honest answer on who gets considered, and what we look at when we assess a business.

Or go straight to the range: browse vans and pickups · company cars

New business van leasing Sole trader van rental Startup fleet leasing Business contract hire explained Choosing van size and payload Van insurance for business explained VAT on van leasing explained