Leasing a Van Now Qualifies for Major Capital Allowance Boost
Businesses will able to claim a 40 per cent First Year Allowance (FYA) on a van lease following a major change announced by the government in its 2025 UK Budget.
Under the new measures to be introduced on 1 January 2026, leased assets – such as a van – will be included among capital allowances for the first time, thus qualifying them for FYA.
The move makes leasing a van more attractive under these guidelines as it provides an upfront tax relief that narrows the gap to full expensing, which is available to outright buyers.
Leased vans had been excluded from first-year allowances, preventing businesses from capitalising on the tax advantage of purchasing outright. However, the change means a substantial deduction in year one and more of the benefits that would otherwise only come from buying.
The change is a significant boost for particularly smaller businesses as leasing a van will require less initial outlay and improve cashflow.
It is hoped the introduction will be beneficial to fleet operators by allowing for a faster turnover of vans and encourage a move towards more efficient, zero-emissions electric vans.
In summary:
- Upfront tax relief of 40 per cent for van leasing using First Year Allowance (FYA)
- More flexibility and cashflow for businesses by spreading costs through leasing a van in addition to enjoying a first-year deduction
- Encourages a faster turnover of vans to support the uptake of cleaner, more efficient models
- Continued benefits of leasing a van, including spreading cost, access to the latest models and no concerns regarding depreciation
As a counter to the 40 per cent FYA boost, the Writing-down Allowance (WDA) for plant and machinery falls to 14 per cent (from 18 per cent), placing more emphasis on the value of the FYA.
More information on the new measures introduced by the UK Government can be found HERE
Leasing with Vansdirect
Leasing a van offers a range of tax and financial benefits that make it a practical choice for many UK businesses. From offsetting lease payments against taxable profits to reclaiming VAT and avoiding depreciation worries. Leasing can help keep your business running efficiently while staying tax smart.
If you’re considering leasing a van, consult with a tax advisor to ensure you’re making the most of the tax benefits available to your business. With the perfect lease deal from Vansdirect, you can enjoy cost savings, financial flexibility, and peace of mind.
