{"id":8620,"date":"2025-03-20T10:07:08","date_gmt":"2025-03-20T10:07:08","guid":{"rendered":"https:\/\/www.cars2buy.co.uk\/news\/?p=8620"},"modified":"2025-03-26T14:28:39","modified_gmt":"2025-03-26T14:28:39","slug":"our-complete-guide-to-electric-car-leasing-for-businesses","status":"publish","type":"post","link":"https:\/\/www.cars2buy.co.uk\/news\/guides\/leasing\/our-complete-guide-to-electric-car-leasing-for-businesses\/","title":{"rendered":"Our Complete Guide to Electric Car Leasing for Businesses"},"content":{"rendered":"
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Leasing a car for business purposes is tricky enough without thinking of the fuel type. It’s time to go electric.<\/p>\n<\/div>\n\n
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In this guide…<\/p>\n

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Give businesses a compelling combination of low running costs and environmental benefits, and they\u2019ll flock to it like gulls to seaside litter. Case in point: electric company cars. With the UK\u2019s push towards net-zero and a phase-out of new petrol and diesel cars, EVs are rapidly becoming the go-to choice for businesses, from small companies to sole traders.<\/p>\n\n\n\n

It doesn\u2019t take a good pair of glasses to see why: company car drivers who choose electric enjoy significantly lower personal tax bills compared to those with petrol or diesel cars. Meanwhile, employers can demonstrate green credentials and save on fuel costs. Everyone\u2019s happy, apart from the dinosaur gas-guzzling car companies, but with the supreme range of EV models today, that\u2019s very few and far between.<\/p>\n\n\n\n

In this guide, we provide an overview of electric car leasing<\/a> for businesses in the UK, explaining why EVs make great business sense as a company car. We\u2019ll cover how business leasing<\/a> works in the first place, the benefits of electric car business leases, and the practical considerations you must consider before getting started.<\/p>\n\n\n

How Does Business Electric Car Leasing Work?<\/h2>\n\n\n

Business car leasing, also known as business contract hire, is essentially a long-term rental of a vehicle by a company. Instead of buying the car outright, your business pays a fixed monthly fee to use an electric car for an agreed length of time (usually 2-4 years) and mileage limit. Once the lease term comes to a close, you hand back the vehicle in a reasonable condition and can upgrade to a new model if you wish. Thoughts of vehicle depreciation, selling it on or even MOT testing ever have to enter your mind – the leasing provider handles those risks.<\/p>\n\n\n\n

One key difference between business and personal leasing is that it offers tax advantages, which we\u2019ll discuss later on. A business lease is usually in the company\u2019s name so approval will depend on your business\u2019s creditworthiness. Sole traders may need to provide personal guarantees.<\/p>\n\n\n\n

When leasing an electric car through your business, you may have to pay an initial rental, which is an upfront payment to reduce future monthly costs. Additionally, maintenance packages can often be added to cover servicing and tyres, should you wish to have peace of mind when it comes to keeping the vehicle condition ship-shape to avoid end-of-lease charges.<\/p>\n\n\n\n

For more information, read our guide to taxing your electric company car<\/a>.<\/p>\n\n\n

Financial Benefits of Leasing an Electric Car for Business<\/h2>\n\n\n

Leasing an electric car through your company comes with a vast array of financial perks – for one, it\u2019s very tax-efficient. Unlike purchasing, where you might tie up capital, lease payments are generally 100% deductible as a business expense for low-emission cars. This means the full cost of your monthly rentals can be offset against profits, reducing your corporation tax bill. There\u2019s a host of other rewards to reap.<\/p>\n\n\n\n

Low Benefit-In-Kind Tax<\/h3>\n\n\n\n

Benefit-In-Kind (BIK) tax is paid by company car drivers for the personal use of a company vehicle, which is based on the CO\u2082 emissions they create weighed up amongst the car\u2019s list price. Fully electric cars, with their carbon-free exhaust pipes, enjoy the lowest BIK rates around, sitting at just 3% in the UK from April 2025 onwards. Conversely, a premium petrol-drinker can have a BIK rate as high as 37%. Would you be willing to pay over 12x more on BIK tax just to have a petrol company car?<\/p>\n\n\n\n

VAT Benefits<\/h3>\n\n\n\n

VAT-registered companies can reclaim a sizeable portion of VAT on the lease – 50% of the lease payment, in fact. If the car was used strictly for business purposes with absolutely no private use, you could theoretically claim 100% of VAT, but with HMRC\u2019s stringent rules on this, it\u2019s honestly not worth the bother. In addition, 100% of the VAT on any maintenance package add-on of a lease is reclaimable, making the addition an attractive proposition. These benefits are very unique to company car leases, so make the most of them.<\/p>\n\n\n\n

Corporation Tax Deduction<\/h3>\n\n\n\n

As we\u2019ve already mentioned, corporation tax is completely chalked off for EV emissions, since they produce absolute zero CO\u2082. But to lay it out further – in practical terms, this means a \u00a36,000-a-year lease saves you a whopping \u00a31,500 in corporation tax at the 25% rate. Going electric isn\u2019t just kind to the environment, but very healthy on your tax bill.<\/p>\n\n\n\n

Fuel & Running Cost Savings<\/h3>\n\n\n\n

Of course, there are the cost-savings benefits of any electric car, running far cheaper per mile than a petrol car. According to UK government advisory rates, the electricity cost for an EV is around 9p per mile<\/a> versus around 21p per mile (and climbing) for petrol. And if employees charge at home or on cheap tariffs, the cost can stoop as low as 2-5p per mile. It\u2019s an absolute steal compared to the rising fuel rates we so often see.<\/p>\n\n\n\n

Maintenance is another saver in the equation: no oil changes and fewer moving parts add up. Research shows that servicing an EV is roughly 20-30% cheaper<\/a> than an equivalent petrol car over the first 3-5 years, but with a lease, you never have to worry about this in the first place. It\u2019s just another notch under electric power\u2019s belt.<\/p>\n\n\n

Electric Vs Petrol\/Diesel Company Cars<\/h2>\n\n\n

How do electric company cars stack up against traditional petrol or diesel one over a lease period? Let\u2019s weigh up the numbers:<\/p>\n\n\n\n