For businesses big and small, company cars and fleet vehicles help to keep their operations running smoothly in more ways than one. If you’ve been thinking of leasing or purchasing a car or a fleet for your business but aren’t sure where to start, we’re here to help you out.
Part business car leasing guide, part purchasing run down, we’ll take a look at what’s available to you with regards to both – so you can see which is right for you - below…
Business contract hire is a long-term rental agreement that lets businesses of all kinds use a car or a van for a specific period of time at a fixed monthly price, usually for around two to four years.
When you choose to lease a vehicle for your business, you’ll pick the vehicle in question, then agree to an initial rental and annual mileage amount, along with how long you want to lease the car for. A credit check will then be performed to see if you’re financially eligible.
If you’re purchasing a car through your limited company, there’s a few things to be aware of from a tax perspective.
If you choose to take a loan out in order to purchase the vehicle, or the vehicle is purchased at the end of a hire contract, then it’s only the interest payments that are an allowable company expense. However, your company is also able to claim Capital Allowances to ease the cost of the vehicle, dependent on the CO2 emissions it produces as well as the date on which you bought it – generally, the more CO2 emissions your company vehicle, or vehicles, produce the more tax you will have to pay. For more information on how you can reduce your carbon footprint when using company cars and business vehicles, head here.
Any running costs of the vehicle, such as insurance and Road Fund License must be paid for by your company, although these will be deductible expenses for Corporation Tax.
When deciding which option is right for your business, you’ll have to factor in things such as your current business circumstances, its financial situation, and your own personal preferences. Of course, both options have their own advantages and disadvantages that you’ll have to weigh up too. These include: