When you work for yourself, every penny counts and it’s up to you to work out what you can claim as an expense when it comes to filling out your self assessment tax return. Things can get complicated fast.
If you use a van to get to your clients and store your tools, you probably have van insurance in place. And sometimes, you might even use temporary van insurance to cover your van or a van you’re borrowing for the day.
But can you claim your temporary van insurance policy as an expense. In other words, is it tax deductible? Let’s find out.
Temporary van insurance: What is it?
Before we delve into the exciting world of tax deductible expenses, let’s get our definitions really clear. What exactly do we mean by temporary van insurance? It’s basically a type of policy that offers comprehensive cover to drive a van from anywhere between an hour and a few weeks – well 28 days to be exact.
It’s perfect if you need to borrow a van for whatever reason. Plus, it’s usually quick and easy to arrange online. So no more waiting for hours on the phone listening to hold music.
Here at Zixty, we even have an app making it even easier to sort cover when you need it. We can literally get you on the road in minutes, so even if you need insurance in a pinch, you shouldn’t have to face too many disruptions to your day.
Now, let’s talk about why you might use temporary van insurance. There are plenty of reasons. Say you’re planning a DIY project and need to transport bulky items from the store to your house. Instead of cramming everything into your car, just borrow a van and get temporary insurance for the day.
Or, if your own van broke down before a big job, but your friend has a van you can borrow, you can use theirs to get your work done and get paid. With temporary van insurance, you could insure their van in your name, and you’re good to go.
When is temporary van insurance tax deductible?
If you’re a sole trader, you’re probably used to filling out self-assessments and paying tax. That or, you have an accountant who does it for you. But you might be wondering whether temporary van insurance is tax deductible too.
Well, bust out the champagne! Because there are certainly some circumstances where you could claim temporary van insurance as a business expense. It says so right on the HMRC website.
So if you’re using your van and temporary van insurance for business reasons, you’re golden. It would fall within what is known as “allowable business expenses” a.k.a it’s tax deductible. Happy days.
But, hold up. What if you use the van for both business and private reasons? Well, the good news is, you can still claim a portion of your expenses anyway. But, it’ll have to be the “business” portion of your expenses. The HMRC is a little vague on how to work that one out, but the general advice is to come up with a “reasonable method of dividing your costs”.
Some people do it on the basis of their mileage, for example. They record the miles they’ve driven for business purposes, subtract them from their total, and then claim for the portion of miles that they’ve driven for business purposes.
Others might rely on simplified expenses where they use a flat rate to work out their costs for maintaining and running a van. In this scenario, you wouldn’t directly be claiming for the policy you bought, but you would be claiming a flat rate that is designed to cover all your expenses.
The downside with simplified expenses is, sometimes you might end up claiming less than you’re owed. HMRC does have a useful calculator to help you decide whether you should claim for each expense separately or just use simplified expenses, though.
When is temporary van insurance not tax deductible?
There are a few reasons why your temporary van insurance might not be tax deductible. The first, and most obvious one, is if you’re using your van for personal reasons. Duh.
Basically, if you took out a temporary van insurance policy on a van to run a personal errand, then that’s not tax deductible. You can’t claim relief for personal use. Otherwise we’d all do it.
But, there are some circumstances that might not be so obvious. For instance, if you have decided to use simplified expenses to claim for a van you own, you can’t then decide you don’t want to do that anymore and start claiming for things like your temporary van insurance policies separately. You’re stuck with the simplified expenses for that van for as long as you use it for business purposes.
If you’re unsure, it’s always worth checking the HMRC website for the latest info on this topic, or better yet, speaking to your accountant. Not everyone’s circumstances are the same after all.
Temporary van insurance: Is it tax deductible?
So, to sum up, temporary van insurance can be a tax deductible expense depending on your circumstances. You can claim for this type of policy much like how you might claim for an annual van insurance policy. As such, very similar requirements apply.
If things are “complicated”, i.e. if you don’t always use the van for business purposes, it’s worth doing further research or even maybe consulting an accountant to make sure you’re filing your returns correctly.
The question about tax deductions isn’t the only possible benefit of temporary van insurance. There are loads! And we’ve kindly created this super hand guide to the benefits of temporary van insurance so you don’t have to. We’re nice like that.
Whatever route you choose, don’t forget to check out Zixty. We can offer comprehensive temporary van insurance with an eco-friendly touch. Intrigued? Basically, if you take out a policy through us and enable the free Zixty Miles add-on, we’ll carbon offset your miles up to 100 miles a day every day.
Also, we’ll throw in a tree with every policy you take out. And by that, we don’t mean we’ll dump it in your front garden. That would be awkward. Instead, we’ll plant one on your behalf somewhere very far from your front lawn. But it’ll still do lots of good for the planet, we promise.
Ready to start searching? Why not check out this blog where we share our top tips for choosing temporary van insurance.
Basically, if you’re looking for (possibly) tax deductible green temporary van insurance that can be arranged in minutes, check out Zixty.