With some of the best jobs now requiring its employees to travel long distances to and from work and even some travel during the working day to meetings, many people don’t want to use their own private cars for commuting to and from work, whether this be because of the mileage or simply the amount of wear and tear on their vehicle. This doesn’t mean however that you are stuck to waiting for buses in the rain and catching trains on your commute to the office. Many people now car leased through their business or workplace.
Leasing a car through a business is very similar to personal car leasing, but what are the benefits to this and how do you decide which is best for you?The main factor for going down the business car leasing route is how much cheaper it can be for you. One of the main money saving benefits is regarding VAT, 50% of VAT Incurred on a contract hire can be claimed back and 100% of maintenance costs can also be claimed back.
Many companies leased cars through the business and these were used as company cars, a standard component of executive salary packages. It became less common as soon as tax was introduced; however, the majority of cars bought in the UK are still company cars.
There are a variety of tax advantages involved with leasing a car through your company, a wide range of car-related and travel-related expenses are tax deductible. Normally leases are typically less expensive than traditional car loans and allow a business to update its vehicles more frequently than would be prudent with vehicles purchased outright.
The lease payments you make to your car hire company are tax deductible for Corporation Tax purposes, so you may make some savings there. The tax office has got wise to this though, and in a lot of cases you only save a few pounds, or even end up worse off. However, if you decide to steer clear of leasing though your business, then don’t forget you will need to pay the VAT in full, so add 17.5% onto the monthly price you have been quoted. You will not be able to reduce your Corporation Tax, but you will save on the Personal Tax as you will not have a benefit.