Business car leasing deals can be a fantastic option for companies that are looking to save money or offer their employees benefits like company cars.
Companies have the opportunity to make huge VAT savings on their monthly payments by taking out a business lease deal, while they also come with a host of additional tax benefits.
By leasing a car, you also free up cash flow that simply would not have been possible if you were to buy a car outright. Having a clear understanding of the exact money being paid towards a company car each month can give business owners financial peace of mind and a hassle-free driving experience for them, their team and their fleet.
If you are a limited company, you can use your monthly lease payments to offset your corporation tax. If you are a sole trader or partnership, you can also offset your lease costs against your annual tax bill.
However, the amount you can offset will depend on the car that you lease. Your vehicle will only be completely tax-deductible if the car in question emits less than 110g/km. For vans, you can offset 100% of the cost regardless of the lease van’s emissions.
Cars that emit 111g/km or more still qualify as tax-deductible, but only up to 85% of its value. A rule that was introduced in 2018 saw a 15% tax disallowance placed on vehicles with higher CO2 emissions.
Be aware that capital allowance cannot be claimed on a leased car as you are not the vehicle owner and are not buying outright.
Claim back VAT on your car lease payments
One of the major benefits that come with business leasing is the ability to reclaim VAT on your initial and monthly payments. However, this is only possible if you are VAT registered.
If you use the vehicle solely for business purposes and has no personal use outside of work, you can claim 100% VAT back against your monthly cost. If your business lease car is used for personal journeys outside of work, you can claim up to 50% VAT.
Should you plan to use your car for personal journeys alongside work, you will be faced with Benefit in Kind tax (BIK). Selected Audi lease deals – a popular choice among business customers – can be as little as 13%. BIK rates can vary between manufacturers and are a worthwhile consideration when searching for your next business lease deal.
Whether you’re expanding your fleet or looking to offer company cars to your employees, Carparison offers a wide range of business lease deals.