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Choosing a company car is a big step for a small business, but should you be leasing a business lease or a personal lease? Find out here.
As a growing business, getting a company car is a significant step that offers widespread convenience and a gratifying status symbol. However, rather than going through the rigmarole of buying a car outright, many are choosing to go the lease route. It’s plain to see why.
Leasing means they get a brand new car that they only have to care for during the best years of its life and never have to saddle with the full price of a new car. But within this option, there is a divide between whether it is better to get a business lease or a personal lease.
As one of the UK’s leading marketplaces for personal lease and business car lease deals, cars2buy has encountered this dilemma countless times, and thus we decided to offer our expert advice to the masses. In this article, we lay out the purposes, advantages and disadvantages of both forms of leases so that you can make an informed decision on which is right for you.
Leasing a Business Car
Leasing a car through your limited company means it is through the business, for the business and paid for by the business. The deals tend to be better for business leases, and you pay company tax rather than personal car tax.
Company tax is paid based on your CO2 emissions, the car’s P11D valuation and your personal tax bracket, yet this often ends up cheaper than personal tax. Plus, you can reduce the amount of company tax you pay by paying some of the car expenses yourself rather than through the business. Conversely, for a total wipeout of CO2 emissions tax, choose an electric vehicle (EV) that produces zero emissions.
If you decide to get a van or pickup lease through your company, company tax does not apply. Instead, you only have to pay a fixed car-tax rate, which is great for self-employed traders.
Personal Lease Cars
Leasing a personal car means that the vehicle has no association with the business itself, meaning you can use the car for both work and as a personal car. The key benefit is that you have no-strings-attached freedom to use the car to your heart’s content, for work or leisure.
This freedom means that you have to record the number of business miles you take, for which your business can then repay you for 45p per mile for the first 10,000 miles and then 25p per mile after that. Overall, a personal lease is fantastic for those who want a car for both work and other purposes without worrying about price depreciation and long-term reliability and instead would like to choose a brand new car every couple of years.
Which is the Better Lease Option?
That is a question that relies on your personal preference – do you want the freedom to have your own car for work and pleasure, or do you simply need a car to get you to your business? The latter is cheaper, but the former is a good all-in-one option for those who need a car and just so happen to own a business too.
Whichever you decide, cars2buy is the nation’s high-rated online selection of personal lease cars and business car lease deals. We have thousands of deals from our trusted lease partners up and down the UK, and you can easily filter through them by contract length, deposit fee and annual mileage.