Business car leasing deals

Business car leasing is a long-term car loan whereby a vehicle is leased on behalf of a company. The company pays a deposit and a predetermined number of monthly payments whereafter the vehicle is either returned to the lender or is purchased outright with a final balloon payment. 

It’s a great way to get a new car every few years, with the option of buying the car outright and not having to part with a large sum up-front. The vehicle can be used for both business and personal use, although this does have a bearing on how much VAT can be claimed by the company. 

Let’s look at Business Contract Hire (BCH) and Personal Contract Hire (PCH) as an example. 

In both instances you pay a deposit followed by a predetermined number of monthly payments for the car. Once the lease comes to an end the car is handed back and there is no option to purchase it outright.

The main difference is that with a business car lease your company can claim back some or all of the VAT on the lease agreement. This can result in a noticeable saving over a comparable personal car lease.

Just like with the broad range of personal car leasing options out there, you can also opt for Business Contract Purchase (BCP) and Business Lease Purchase (BLP) packages. These allow you to further tailor the deposit and monthly payments as well as giving you the option to buy the car outright at the end of the deal.

With a business car lease the company is effectively leasing the vehicle. This means that the details provided will all relate to the company and not the individual or individuals who will be using the car. 

You will need to provide the details of the business owner and directors as well as the address and registration number of the company. Bank statements are also usually required to verify whether the business can afford to take on the lease.

Yes. A business lease is available to self-employed individuals as they will be viewed as a sole trader by leasing companies. You will be required to provide proof of your address, copies of your recent bank statements and trading accounts - just like applying through a business.

Yes. Most leasing companies require a few months bank statements and proof that the business is a going concern. If you can show that the company is able to afford the monthly payments, then you should be able to get a business car lease.

If the business has been going for less than two years you may also need to submit a director’s guarantee that the payments will continue to be made if the company cannot do so – usually only for limited companies. You could also be asked for a set of management accounts and recent business bank statements.

Yes. Leasing a car is an allowable tax-deductible expense. However, the amount you can allocate as tax deductible depends on the CO2 emissions of the vehicle. Opting for an Ultra Low Emission Vehicle (ULEV) or an electric car may help you get the most out of your business lease deal.

If you are using the car solely for business purposes, then you should be able to claim back 100% of the VAT portion on the payments as well as any maintenance agreements. If you also use it for personal use, then the claimable VAT portion drops to 50%.

The company leasing the car is liable for all costs associated with the lease, some of these can be incorporated into the deal to help spread the costs over a longer period. Most lease deals also include the road tax in the monthly payments.

A leased car needs to be comprehensively insured and it is the responsibility of the business to make sure that it is adequately covered for its intended use. 

Maintenance and servicing the car is also the responsibility of the business. There are maintenance packages available which can be added to a lease contract which will allow you to spread the cost over the lease period.

If you have taken out a Business Contract Hire (BCH) agreement, the vehicle is handed back to the leasing company. There is no option to buy the car outright and if the lease conditions have been met no further payment is required. If you have exceeded the mileage limit or the car exhibits undue wear and tear you may be charged a penalty fee.

If the lease agreement is a Business Contract Purchase (BCP) then you will have the option to keep the vehicle by making a predetermined final balloon payment. If it is a Business Lease Purchase (BLP) then the vehicle must be purchased at the end of the agreement.

A company car lease means you will have access to a new car every few years that is paid for by your company. Some company car leases also cover servicing, insurance and even fuel. You will need to pay a Benefit-in-Kind (BiK) tax that is dependent on the car’s CO2 emissions and your tax bracket. If fuel is part of your package you will need to pay the tax on the annual fuel allowance. 

A company car allowance is a cash sum you receive that can go towards whatever you want. It can be used to purchase a car or simply to bolster your income if you have the option to use alternative transport instead. There is a tax implication to a car allowance so it us up to you to decide which route is the most cost-effective.