How to Budget for Fleet Expenses as a Small Limited Company
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The short version
- Budget per van, then add them up. A single "vehicles" line hides the problem.
- Split costs into fixed (same every month) and variable (moves with the work). Treat them differently.
- The bills that hurt are the lumpy ones: MOT, road tax, tyres and big repairs. Put money aside monthly so they don't land from nowhere.
- Compare budget against actual every month. A budget you never look at is just a wish.
Why small limited companies get this wrong
When you've got one or two vans, you don't budget. You pay the bills as they come and keep an eye on the bank balance. That works, right up until you've got four or five vans, a couple of drivers and a month where the MOT, the road tax and a set of tyres all land together.
A limited company has an extra reason to be tidy. The company pays the bills, the books go to your accountant, and those figures end up in your accounts. If vehicle costs are scattered across a card, a few receipts and somebody's phone, you'll feel it at year end.
The good news is that a fleet budget isn't hard. It's a short list, filled in carefully. Here's how I'd do it.
Step 1: List every vehicle
Start with a simple list. Registration, make, how it's paid for (cash, finance or lease), and roughly how many miles it does. That's your base.
Budgeting per van matters because vans behave differently. An older one might cost little in finance and a lot in repairs. A newer one might be the opposite. Lump them together and you'll never see it.
Step 2: Split costs into fixed and variable
This is the single most useful thing you can do.
Fixed costs are roughly the same every month, whatever the work:
- Finance, hire purchase or lease payments
- Insurance (if you pay monthly)
- Breakdown cover
- Software or subscriptions
Variable costs move with how hard the vans work:
- Fuel or charging
- Servicing, tyres and repairs
- Parking, tolls and any city charges for clean air or congestion zones
- Cleaning, screenwash and the odd consumable
You can plan fixed costs almost to the penny. Variable ones you estimate, then check against reality.
Step 3: Deal with the lumpy bills
This is the step most firms skip, and it's the one that causes the cash-flow panic.
Some costs only come round once a year, or when something goes wrong:
- Vehicle tax. GOV.UK's vehicle tax rate tables list the current rates. For a standard light goods vehicle registered on or after 1 March 2001, the 12-month payment from 1 April 2026 is £360, though some older vans pay less. Check the tables for each of yours.
- The MOT. The maximum fee is set by law, and GOV.UK publishes the current MOT fees. Currently £54.85 for Class 4 and £58.60 for Class 7. But budget for the test and a repair allowance, because that's where the real money goes.
- Tyres. Not annual, but predictable. Roughly when does each van need a new set?
- Insurance renewal, if you pay annually.
- Big repairs. Can't be predicted, but you know they'll come.
The trick is a sinking fund. That's just a fancy name for putting a bit aside every month so the bill is already paid for when it arrives. Divide the annual cost by 12, move that amount into a separate pot, and the lump stops being a lump.
For the repair side, here's a rule of thumb that's my own, not an official figure: look at what each van actually cost in repairs over the last 12 months, then add a cushion on top for next year, particularly for older vans. How big a cushion depends on the van's age and condition, and only you know that. If you've no records, start by tracking for three months and adjust.
Step 4: Put in a buffer
However carefully you plan, something will break. A buffer line in your budget (again, size is your call) means a surprise bill is an inconvenience, not a crisis.
I'd rather see a firm with a modest buffer it never uses than one that has to pull money out of the wages pot on a Friday.
Step 5: Set up one place for all the receipts
A budget is only as good as the numbers going into it. If drivers pay for fuel on their own cards and hand over screwed-up receipts a month later, your actuals will always be wrong and always late.
Decide how it works:
- Who pays for what, and how
- Where receipts go the same day
- How invoices from the garage are logged against the right van
If you use FleetGuv, the maintenance log per van holds work due, work scheduled and the costs, and you can export it as a CSV to upload into Xero or QuickBooks. But whatever you use, the principle is the same: one record per van, filled in as you go, not at the end of the month.
Step 6: Review every month
Once a month, set aside half an hour and compare budget against actual for each van:
- Which van is over?
- Is it a one-off, or a pattern?
- Are any lumpy bills coming up in the next 60 days?
- Does the sinking fund cover them?
That's it. You're not looking for perfection. You're looking for surprises, and the earlier you spot them the cheaper they are.
What about tax and capital allowances?
This is where I stop and tell you I'm not an accountant. How vehicle costs are treated for Corporation Tax, including capital allowances on vans, depends on your company's circumstances. GOV.UK has an overview of claiming capital allowances, and I'd start there to get the picture. Then ask your accountant what applies to you, particularly before you buy or finance a new van.
What I can say with confidence is that dated, per-van records make that conversation quicker.
A simple layout to copy
If you're starting from scratch, a spreadsheet with one tab per van and a summary tab works fine. Columns I'd use:
- Cost type (finance, insurance, fuel, service, tyres, MOT, tax, other)
- Budgeted per month
- Actual this month
- Difference
- Notes
Then a yearly row for the lumpy bills, divided by 12, feeding your sinking fund.
If you find that sheet getting out of hand, it might be a sign you've outgrown it. I list the warning signs in 7 Signs Your Small Business Has Outgrown Spreadsheets for Fleet Tracking.
Where to go next
To know what to put in your budget, you need to know what a van really costs to run. I've broken that down line by line in The Real Cost of Running a Van Fleet in the UK (2026 Breakdown). And once your budget's in place, the next thing to watch for is the costs that don't show up on any invoice, which I cover in Hidden Costs of Fleet Ownership Most Small Businesses Miss.
For the bigger picture, the full guide is Fleet Costs and Budgeting for Small Businesses: The Complete Guide.
The bottom line
Budget per van. Split fixed from variable. Save monthly for the big annual bills. Keep a small buffer. Review it every month. None of it is clever, but it's the difference between a fleet that runs you and one you run.
Written by Chris, Founder of FleetGuv