Is Van Hire Excess Insurance Tax Deductible for Businesses?
Van Hire Excess Insurance is the kind of thing most people hope they’ll never need but it’s invaluable if something goes wrong. For business owners and sole traders, the big question isn’t just “should I get it?” but “can I claim it back?”
In this post, we’ll break down whether Van Hire Excess Insurance is tax-deductible in the UK, what HMRC says about it, and how to claim it back properly plus a few real-world examples to make things a little clearer.
HMRC Rules on Vehicle Hire Costs
HMRC allows you to deduct the cost of hiring a vehicle for business purposes, provided the expense is considered “wholly and exclusively” for the trade.
But not all vehicle-related expenses are created equal.
There are two important tax terms to understand:
- Capital expenses – These are usually one-off purchases of assets like vans or cars you plan to keep. They’re not normally claimed as business expenses in full right away.
- Revenue expenses – These are your everyday business costs, like fuel, parking, and yes—insurance. These can be deducted against your profits for tax purposes.
Van Hire Excess Insurance typically falls into the revenue category, assuming it's used for business.
Insurance Premiums as Allowable Revenue Expenses
According to HMRC, insurance premiums can be claimed as business expenses if the insurance is:
- Directly related to your business activity
- Used exclusively or mainly for business
- Backed up with evidence
So, if you hire a van to deliver products, attend a trade show, or carry out other work-related tasks, the excess insurance can usually be deducted. That includes temporary cover like Gigasure’s Van Hire Excess Insurance.
You may also claim for add-ons like goods-in-transit cover, if they relate directly to your business activity.
Typical business uses where you can claim:
- Transporting tools and materials for a job site
- Moving business equipment
- Business relocations
- Delivering products to clients – excluding use for hire and reward
- Renting a van for a temporary contract or event
Claiming When the Van Has Private Use Too
Many small business owners rent vans for mixed purposes: say, a work delivery followed by helping a friend move house. In this case, only the business-use portion of the insurance is deductible.
You’ll need to apportion the cost accordingly.
For example:
- If you used the van 60% for business and 40% for personal use, you can claim 60% of the insurance cost.
- Keep a simple log or calendar note outlining how the vehicle was used, in case HMRC asks.
Apportionment is essential if you’re a sole trader. For limited companies, private use of company vehicles can create benefit-in-kind implications, so speak to an accountant if you’re unsure.
Where to Enter on SA103 / CT600
Claiming is relatively simple if you keep clean records.
If you’re self-employed (sole trader or partnership):
- Use the SA103 Self-Assessment form.
- Insurance premiums usually go under:
“Other expenses” or “Car, van and travel expenses” if directly related to vehicle use.
If you operate a limited company:
- Use the CT600 Corporation Tax Return.
- Vehicle hire expenses and insurance can be recorded in:
“Other allowable trading expenses” (Box 122 on CT600 form). - You’ll also reflect the cost in your statutory accounts under “Administrative Expenses.”
Input VAT – What You Can and Can’t Reclaim
This part can be a bit trickier.
- Van hire: Usually includes VAT, and if the van is used for business, you can reclaim it.
- Van hire excess insurance: Typically not subject to VAT. That means you won’t see a VAT amount on the invoice—and you can’t reclaim what isn’t there.
If your Gigasure policy does list VAT separately, and your business is VAT-registered, then you could reclaim that part.
Record-Keeping Checklist
To safely claim van hire excess insurance as a deductible business expense, make sure you keep:
- A copy of your policy invoice
- The van hire agreement, with dates and company details
- Logs or a calendar showing business use
- Any goods-in-transit declarations if relevant
- Your payment confirmation for proof of expense
Good record-keeping not only makes life easier at tax time but also helps protect you if HMRC ever reviews your return.
When Excess Cover Is NOT Deductible
Some scenarios where you can’t claim the insurance:
- Hiring a van for a personal house move
- Using the van while on a private holiday
- Hiring a van abroad for non-business reasons
- Cover for a family member or friend not connected to your trade
Even if the van was technically hired by your business, if the use is private, it won’t qualify for tax relief. If you're ever unsure, check the "wholly and exclusively" rule.
Final Thoughts: Make Claims Easier with Gigasure
Whether you’re hiring a van occasionally or juggling multiple rentals across your busy business calendar, Gigasure makes it easy to stay protected and compliant.
- Cover from just a few pounds a day
- Works with any UK or EU rental company
- Manage everything through the Gigasure app
Get a quick quote or manage your policy online at Gigasure.com.
Frequently Asked Questions
Can I claim van hire insurance as an expense?
Yes, if you’re using the van exclusively for business purposes, the insurance cost (including excess cover) is generally considered a valid business expense. This means you can usually claim it on your Self-Assessment (SA103) or company tax return (CT600). Just make sure to keep your receipts and only claim the portion that relates to business use. If you're mixing personal and business travel, you’ll need to apportion the cost fairly.
Is excess insurance an allowable deduction?
It can be. Van hire excess insurance is usually an allowable deduction if it’s:
- Directly related to your business activities
- Not used for personal travel
- Supported by receipts or invoices
For example, if you rent a van to deliver client orders and take out excess insurance to avoid paying out-of-pocket in case of damage — that cost can often be deducted. But remember, HMRC expects accuracy and transparency — don’t try to claim it if the trip was mostly for personal reasons.
Can I reclaim VAT on van rental insurance?
No, van hire excess insurance is subject to insurance premium tax (IPT) and not VAT and you can’t claim the IPT back.
