Motor trades
Accountants for Car and Van Hire Companies
Motor Trade Accounting helps car and van hire businesses across the UK find accounting and tax support that understands fleet-based trading. Get clear advice on buying, financing, running and selling the vehicles your business depends on.
A fleet is an investment that has to keep earning
A hire business buys vehicles, rents them out for as many days as possible and sells them on before running costs and depreciation eat the margin. Every stage has accounting and tax consequences: how the vehicle is financed, how its cost is written off, how VAT is handled on purchase and sale, and what it is worth when it leaves the fleet.
Day to day, income arrives as hire charges, deposits, insurance excess payments, damage recharges and extras such as additional drivers or delivery. Seasonal demand, corporate accounts and replacement vehicle work for garages or insurers all affect cash flow. Utilisation and the cost per hire day are the figures that really show whether the fleet is earning its keep.
A specialist motor trade accountant helps bring that together, so decisions about fleet size, finance and disposal timing are made with a clear view of profit and tax, rather than on instinct alone.
What specialist support covers
Support is focused on fleet economics and the rules that apply to hire vehicles.
- VAT on hire vehiclesAdvice on recovering VAT on cars bought mainly for self-drive hire, and on the VAT due when those cars are sold.
- Capital allowancesCars allocated to the right pool by their CO2 emissions, with vans claimed through the annual investment allowance where available.
- Fleet financeHire purchase, leases and fleet funding lines recorded correctly, with interest and capital separated.
- Depreciation and disposalsSensible depreciation policies and accurate profit or loss on each disposal.
- Deposits and rechargesCustomer deposits, excess payments and damage recharges recorded and reconciled properly.
- Corporate and insurer accountsInvoicing and credit control for business customers and replacement vehicle work.
- Accounts and tax returnsYear-end accounts, corporation tax and VAT returns under Making Tax Digital.
What to plan for
Fleet decisions are easier with the numbers worked out in advance.
Fleet size and mix
Plan how many vehicles you need across the seasons, and which types earn the most per day after costs.
When to sell
Disposal timing affects resale value, VAT and capital allowances. Plan it rather than selling only when a vehicle is worn out.
Electric vehicles
Electric cars bring different running costs, charging needs and tax treatment. Model the figures before adding them to the fleet.
Insurance and claims
Fleet insurance is a major cost. Understand how claims and excess recoveries are recorded so the true cost is visible.
Good to know
Cars used for self-drive hire are an exception
VAT on cars is normally blocked, but it can usually be recovered on cars bought primarily for self-drive hire. VAT is then due when the car is sold.
Cars do not qualify for the annual investment allowance
Hire cars are claimed through writing down allowances, at a rate that depends on their CO2 emissions. Vans are treated differently.
Zero-emission cars
First-year allowances for new zero-emission cars have been available for some time. Check the current end date with your accountant before relying on them.
Damage and excess charges need care
The VAT treatment of charges made to customers for damage or early returns depends on the circumstances, so get advice on how your terms are worded.
How it works
- 1
Send an enquiry
Tell us about your fleet, your customers and what you would like help with.
- 2
Talk it through
A specialist accountant discusses your finance arrangements, VAT position and reporting needs.
- 3
Get a proposal
You receive an outline of the work, from year-end accounts to regular fleet reports.
- 4
Keep the fleet under review
Utilisation, costs and disposals are reviewed regularly so fleet decisions are made on current figures.
Questions hire businesses ask
Can I reclaim VAT on hire cars?
Usually yes, if the cars are bought primarily for self-drive hire. You will then need to account for VAT when they are sold.
How are capital allowances worked out on hire cars?
Cars go into the main pool or the special rate pool depending on their CO2 emissions, and allowances are claimed each year on the balance.
Should I buy or lease fleet vehicles?
It depends on cash flow, VAT, tax relief and how long you keep vehicles. Comparing the options with real figures is the best guide.
How should I record customer deposits?
Deposits held against damage are usually a liability until they are returned or applied. Your accountant will help you set up the right treatment.
Does hiring out vans change anything?
Vans are commercial vehicles, so VAT recovery and capital allowances work differently from cars. Larger vehicles may also bring licensing rules.
Who will I be speaking to?
A qualified accountant who works with motor trade businesses, including hire and rental operators.
Make every vehicle in the fleet pay its way
Send an enquiry and we'll arrange a conversation with an accountant who understands hire businesses.