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Published: 20 Mar 2026 | Last reviewed: 20 Mar 2026 | Reviewed by: VanCompare Editorial Team
“Don’t buy — just rent” makes a punchy headline, but it’s rarely true for everyone. The better question is: what’s the lowest-risk, best-value way to get the van you need for the work you actually do?
For some businesses, long-term rental is a smart way to avoid big upfront costs and resale risk. For others, buying (or financing) still works out cheaper over the life of the vehicle.
The three main options (and who they suit)
1) Long-term rental (monthly rental contract)
Often best when:
- you need a van quickly for a contract or seasonal peak
- workload and mileage are uncertain
- you want maintenance bundled and predictable costs
- you don’t want the hassle of selling later
Main trade-off: monthly costs can be higher than ownership if you keep the van for years and don’t need the flexibility.
2) Leasing/contract hire (business lease)
Often best when:
- you want a newer van on a fixed term
- mileage is predictable
- you want to avoid depreciation and disposal risk
- you can manage contract conditions (fair wear, servicing compliance)
Main trade-off: early termination can be expensive, and mileage/condition terms matter.
3) Buying (cash or finance)
Often best when:
- you’ll keep the van for a long time
- you do high mileage and want no contract limits
- you can maintain it well and manage resale
- the van needs specialist fit-out (racking, refrigeration, conversions)
Main trade-off: depreciation risk is on you, and you carry the “big repair bill” risk as the van ages.
A reality check on depreciation
Depreciation varies hugely by make/model, age, mileage, and used market conditions. Some industry sources summarise first-year depreciation for vehicles as roughly 10–40%, depending on the vehicle.
That’s why many businesses prefer lease/rental structures — you’re paying for use rather than owning the resale problem.
The HMRC mileage rate mistake people make
Older articles sometimes imply you can “cover a rental cost” with an HMRC mileage allowance. That’s not how it works.
HMRC’s approved mileage allowance payments (AMAP) for employees using their own car/van for business are:
- 45p per mile for the first 10,000 business miles in the tax year
- 25p per mile after 10,000
These rates are used to calculate tax-free reimbursements (or tax relief on shortfalls) — they’re not a general grant that pays for renting a van.
To show how different it is from the old claim: 24,000 business miles at AMAP rates is:
- 10,000 × £0.45 = £4,500
- 14,000 × £0.25 = £3,500
- Total = £8,000 (this is the AMAP calculation, not “money from HMRC”).
Tax basics that can change the “best” option
Tax treatment depends on business structure and use, but these are the big levers to be aware of:
Capital allowances (buying)
If you buy a van for business, you may be able to claim capital allowances. GOV.UK explains the Annual Investment Allowance (AIA) can give up to £1 million of relief on qualifying plant and machinery.
Company van Benefit-in-Kind (employee use)
If an employer provides a van that’s available for private use, HMRC’s van benefit charge applies (separate from VED/“road tax”). For 2025/26 the standard van benefit charge is £4,020, and zero-emission van benefit is nil for 2025/26.
(If there’s no private use, the benefit may not apply — but policies and evidence matter.)
A simple decision checklist (do this before choosing)
Use this to avoid choosing based on headlines:
- How long do you need the van? (3 months, 12 months, 4 years?)
- How predictable is mileage? (contract limits vs real-world work)
- What’s your downtime tolerance? (who pays for repairs / who supplies a replacement?)
- Do you need specialist fit-out? (ownership can be simpler for heavy conversions)
- What’s your cashflow priority? (upfront spend vs predictable monthly costs)
- What tax position applies to you? (capital allowances, allowable expenses, BIK exposure)
Bottom line: long-term rental can be the right choice when flexibility and risk reduction are the priority — but “cheaper than buying” needs to be proven with your own mileage, term length, and tax position.
Sources
- HMRC (PDF) — P11D Working Sheet 6 (2025/26 AMAP rates: 45p/25p for cars and vans)
- ATT — Back to basics: HMRC approved mileage rates (45p/25p explanation)
- GOV.UK — Claim capital allowances (AIA up to £1m; overview)
- GOV.UK — Capital allowances update (notes £1m AIA and full expensing context)
- GOV.UK — Travel mileage and fuel rates and allowances (company van benefit charge table)
- HMRC (PDF) — P11D Working Sheet 3 (zero-emission van benefit nil for 2025/26)
- Vanarama — Vehicle depreciation overview (10–40% first year, broad guidance)
VanCompare Editorial Team
The VanCompare Editorial Team produces clear, practical guidance on UK van insurance and related topics. We work with FCA authorised insurance providers and use insurer information where relevant to explain cover in plain English and help drivers make informed decisions.
- Where relevant, our content is checked against publicly available UK guidance and information from sources such as the FCA and GOV.UK to help keep it accurate and up to date.
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