ATV & ATV Fleet Finance
All Terrain Vehicles (ATVs) are a mainstay for many outdoor businesses in the UK, from agriculture to outdoor facilities such as golf clubs. Businesses of all sizes are attracted to the benefits of financing their ATV’s, to easing the burden on cash flow, possible business tax relief, and the ability to upgrade to more advanced vehicles more regularly.
Your eligibility for being approved for ATV finance will depend on various factors which we have detailed below:
- The Rationale and use for the vehicle
Lenders will want to understand the reason you are looking to acquire an ATV for your business. For instance, if you own a golf club – this could be for green and course maintenance.
- Your business’ financial position
Lenders will want to see stable business finances and a history demonstrating adequate cash flow to repay the finance.
- Your credit history
Lenders look at your credit history in order to understand how you have dealt with debt repayments historically. If you have a less than favourable credit score, you may find it difficult to finance an ATV or a fleet of these vehicles for your business.
- Debt-to-income ratio
Lenders will want to see a reasonable balance between your existing business debts and your business income. A high ratio of debt may lead to rejection for ATV finance.
- The model, age and condition of the ATV (if in used condition)
Age & Condition typically only applies to used ATV’s:
You may finance a lightly used ATV in good condition with relative ease. For instance, if the vehicle has 2,000 miles on the clock and is visibly in good mechanical condition, a lender will likely have the appetite to finance this asset. However, if the ATV you’re looking to finance has been used extensively with 15,000 miles on the clock; and is showing visible signs of wear and tear, it is unlikely that lenders will approve this for finance.
- Details of any related businesses
If you run another business, brokers and lenders will want to understand this business in detail to ascertain how this business fits into your wider ‘group structure’.
Our lenders consider finance applications through a more commercial lens than high street banks. High street banks focus primarily on your credit history, whereas our lenders also look at the above factors which make up your ‘business case’ – the commercial viability of your business and its ability to generate cash. This means, even if you have a less than perfect credit history – our lenders may still consider you creditworthy; whereas you’d find more difficulty with high street lenders.
What are the benefits of financing an ATV or a fleet of ATVs for your business?
Lower up-front costs
Acquire the correct ATV/fleet of ATVs for your business without the large up-front costs associated with new vehicles. This eases the burden on your cash flow, allowing you to invest more funds into other areas of your business.
Possible tax relief
If your vehicle is used solely for commercial use, you can qualify for various tax benefits. If your ATV is road legal, you can qualify for AIA (Annual Investment Allowance). Here, you’d qualify for VAT relief if you finance the ATV, meaning you can claim back the VAT you pay on the finance payments.
There are various tax allowances available for commercial ATVs:
- Benefits-in-kind
- Capital allowances
- VAT relief
Benefits-in-kind
If your business uses a commercial vehicle for private use, it may attract benefit-in-kind (BIK) tax. However, for ATVs and specifically-tailored commercial vehicles, there are more favourable terms. If your ATV is used solely for business purposes, you don’t have to pay any BIK tax. Those who are self-employed can also use their ATV for minor personal use and you won’t have to pay BIK tax, this is known as “insignificant private use”. In contrast, if your ATV is provided by an employer, they will have to pay BIK tax if it is used for purposes outside of business operations.
Capital Allowances
Your business can claim Capital Allowance on your ATV. This allows you to deduct a portion of the vehicle’s cost from your profits, meaning this portion isn’t taxed. ATVs qualify under the Annual Investment Allowance (AIA), allowing your business to claim tax relief on plant & machinery goods. This allowance can be claimed on most plant and machinery goods up to £1 million. Electric ATVs currently qualify for 100% first year allowance.
VAT relief
If your business is VAT registered, you can often claim back the VAT paid on the finance of a van. The amount you use the van for personal use can affect this. It’s advised to keep a track of every journey in order to comply with correct tax implications.
What to look out for when financing an ATV
Type of finance
Different financial products provide different levels of service – for example if you have an operating lease on your ATV, it is the lender’s responsibility to cover any maintenance and servicing costs – as they are the owner of the asset. If you use Hire Purchase finance, maintenance and service costs will be your responsibility.
Aftercare and warranty
It’s a good idea to check the level of aftercare covered by the manufacturer’s warranty. It is crucial you check if and how any potential issues are covered by the manufacturer, and the process involved.
Ownership
The type of finance you use for your ATV will have implications on your ownership of the vehicle. If you take the route of an operating lease, you will never own the asset – even at the end of the agreement. If you choose to go down the Hire Purchase route, you own the vehicle once the final payment has been made.
Conclusion
ATV finance is a practical way to acquire a commercial all-terrain vehicle or a fleet of ATV’s for your business without the need for large upfront investment. Take time to understand the financing options available and the implications of each on your cash flow, ownership, and business goals. If you’re looking for guidance on what’s best for your business, get in touch with Mill Wood.
