INSIGHTS & GUIDES
What are the benefits of leasing a car for business?
How does business car leasing work?
Business car leasing is a long term rental agreement and is designed for all types of businesses, including limited companies, sole trader and partnerships.
6 steps to a business lease
- Choose a vehicle - search our website for your desired vehicle
- Get a written quote - a buiness quote will be plus VAT as some businesses can reclaim the VAT back
- Apply for credit - company and director details are required, sometimes 3 months bank statement or company accounts are requested by the finance company
- Order your vehicle
- Complete finance documents - finance contracts will be raised in your company name for completion by the directors
- Arrange delivery
So if you want to know how does leasing a car through a buiness work it's as simple as that!
Who qualifies for business car leasing
As an owner of a buiness you may have many questions and may want to know can I lease a car through my business? Any business regardless of their size are eligible for a business lease if they fit into one or more of the following catergories:
- Limited Liability Company (LTD)
- A Limited Liability Partnership (LLP)
- A Public Limited Company (PLC)
- A Sole Trader (Self-employed car lease or van lease)
- A Charity or Pulic Company
What do you need to lease a car for buiness?
Leasing a car through my limited company, what do I need to know?
Eligibilty criteria:
- Must be trading for a minimum of 3 years (some finance companies do look at start up companies, please ask for further information).
- Show a suitable income and profit level
Documentation required:
- The details of your business e.g. business name, address, company registration number etc.
- Director or business owner detials e.g. name, date of birth, home address, etc
- Bank details e.g. account number and sort code
Additional credit check information may be required:
- 3 months business bank statements
- VAT return (if you are VAT registered)
- End of year accounts
- Last tax return
- A director's guarantee to support the business application may be requested
Is business car leasing cheaper than personal car leasing?
Looking through our website you may wonder why are business leases cheaper than personal? Essentially there is no difference, personal car lease deals include VAT whereas business car lease are plus VAT as some businesses can reclaim anything from 50% to 100% of their VAT & up to 100% of the maintenance agreement, hence making their lease deal cheaper. If you are looking for a self employed car lease it is worth considering both a business or personal lease, it just depends which will best suit you or your business.
Benefits of leasing car for business
As a business you may want to know what are the tax benefits of leasing a car through your business?
Imporved cash flow & fixed monthly payments
Leasing a car requires far less money than an outright purchase and gives your business a healthier balance sheet.
Off set of depreciation
A new vehicle depreciates as soon as you drive it away from the forecourt, with a lease vehicle the depreciation is the responsibility of the finance company.
Usually cheaper than a personal lease
VAT breaks that are available e.g. VAT on monthly payment and maintenance
Reclaim costs through corporation tax
Car lease tax benefit is that you can offset payments and VAT against corporation tax
Brand new vehicle
You and your staff will have access to new vehicles every 2-5 years depending on the lenght of your lease. Company car lease is a good incentive for staff.
Many small business owners are often unsure whether it will be more tax efficient to lease the car personally, or throught their company. Choosing the wrong option could be a costly mistake. Unfortunately there is no right answer, the best option depends entirely on your own circumstances and its worth noting that both options have benefits and limitations. For the best advice we suggest you visit your accountant who will know the nature of your business and the best possible type of lease.
