Motorhome rental start up advice request - Investment of personal money / tax / outgoings

[JSRichard]

Hi

Apologies if this is posted in the wrong section.

Some of the questions below may be best suited to different sections of the forum but I thought it better to keep all the questions grouped together in the one post for now.

Any advice / words of wisdom / experience on anything related to the below or running of a vehicle rental business would be greatly appreciated and taken on board.

I am in the process of writing my business plan for a motorhome rental business to be located at a plot next to my house. (Plot is a field to be purchased by myself privately).

I am not planning on giving up my current job (not in the first 18th months of trading) along with holidays they can work with me for motorhome pick up / drop offs to allow me to do it on the side initially.

I am currently in the 40% tax bracket as an employee. What is the best way to set up the business with this in mind or does it even affect it?

Initially I will be looking to purchase anywhere between 3 and 6 motorhomes for delivery in April 2015 with the first rentals hopefully being that week all going well.

The motorhomes have an approximate cost of £42k each.

As a new start up, what is the best way to purchase these motorhomes? I do not have the money to purchase them all outright. The two options I see will be to pay the deposits with my own money (How do I put my own money into this business whereby I get it out again without being taxed on it?) and either get finance from the dealer (I appreciate some of their finance companies do not allow hire or reward of the vehicles they are financing) or get a business loan (maybe not so easy) and buy the motorhomes outright from the dealer.

Is the interest paid on the above then tax deductible?

What is the most tax efficient way to purchase a vehicle for rental which will be replaced in 2 to 3 years? Can depreciation of the vehicle be taken into consideration anywhere?

Insurance for each vehicle is ~£1800 per year and I plan on paying this on a monthly basis which will incur a little interest. Is this considered an operating expense and is it tax deductible?

In my head I seem to have many more questions but having difficulty writing them down clearly! Some information on the above will help get my thoughts in order and may well lead on to further questions!

Thanks in advance, your expertise would be much appreciated.

Richard

 

[Scalloway]

If you are a 40% tax payer you are probably better running the business through a limited company. If you buy the the motorhomes on HP you can claim capital allowances on them and the interest is tax deductible,

 

[TheGuru2010]

Hi Richard,

I deal with insurance for the hire business quote frequently, I have replied to many posts on this forum. It may be worth having a read through some of my old posts.

It should bring up some food for thought & then just shout back if you need anything else?

Jamie

 

[CMO]

Richard
I have just come across this thread, I was wondering how you are getting on with your venture of hiring out the motor homes. I look forward to your reply as I am interested in a similar path.

Regards
Cathal

 

[DavidAshdown]

I know this thread was posted last year, so just wondering how it is going. Did you manage to get the business off the ground?

If yes, well done, would love to hear how it is going.

If not, some thoughts.....You say you want to buy 3 to 6 motorhomes. Have you got enough bookings to provide sufficient work for them?

This is a tricky one because its a bit of a chicken and an egg scenario. The return on motorhome hire is good if you have a reasonable order book for hires. Don't forget it is largely (although not solely) seasonal. The vehicles still have to be paid for in the winter (insurance, finance etc).

Marketing is paramount, without the bookings you will struggle to get the return.

I would say buying 3 to 6 on day one is a big undertaking and commitment, especially if relying on finance.

The next problem however (chicken and egg) is if you don't have spare vehicles, what happens when a hirer has an accident? Most hires run Sat to Sat. What happens when one comes back late, damaged or even written off? The next hirer, usually lined up 2/3 hours later, is waiting, bags packed, kids excited, surf board in hand, only to be told there is a problem with the vehicle !...annual holiday potentially ruined !

Will you have maintenance staff, spare parts, mechanics and even cleaners on hand ready to turn a vehicle round in 2/3 hours on a Sat, whilst also managing the hand over process of 3 to 6 vehicle hires?

Not being negative, just realistic. This is a fairly specialised area and one normally associated with another primary business that can support these sort of issues.

I'd love to know how you have got on, because it's a market I looked at myself but turned down for those very reasons.