If you’re looking to lease a commercial vehicle you have two options, you could hire a car through personal contract hire, or business contract hire. Opting for business contract hire is often cheaper overall, and leasing a car for your business has many advantages.
If you don’t want to make the long-term investment of buying a commercial vehicle, then you can lease one through your limited company, for example. There are many benefits to leasing a car for your business.
How does business contract hire work?
Car Leasing is available to business owners through business contract hire. It’s essentially a long-term agreement allowing the business itself as an entity to hire a car.
You will pay a fixed monthly rate over an agreed period of time. This could range from two years to four years, but it depends on the company you’re leasing from. To save the most money, the car is then to be used for commercial purposes only. It’s not a problem if it’s used for personal use, but this could affect tax benefits.
You can claim back 50% of your VAT if you lease a car for your business. If the vehicle is solely used for commercial purposes, you could potentially claim all of your VAT. You can also claim 100% of the VAT on your maintenance agreement.
If you have company cars for employees, you can get a tax reduction as well. This also depends on personal use. You can calculate tax on company cars online to find out more about individual employees’ vehicles for example.
Any financial commitments related to the lease of your commercial vehicle are considered off balance-sheet. This creates a simpler accounting solution because it means that this financial liability doesn’t need to be shown on company accounts. This an attractive benefit for many businesses.
Fewer financial commitments
By leasing a car for your business you will have fewer financial commitments. You can pay for it in monthly installments which are much more manageable. Buying a car would mean paying a large sum as a down payment.
You also don’t need to worry about the car depreciating in value over time. Not only will save money, but you can also choose a car to match your job. With fewer financial restraints, you’ll be able to take your pick of a wider range of new cars to suit your business.
Discount for low emissions
If you take the environment into consideration when choosing a car to lease for your business you will get a tax reduction for low emissions. This is a government incentive to lower fuel emissions overall. You’ll be able to reduce your carbon footprint and your taxes at the same time. This is just one of the financial advantages of leasing a car for your business.
If you’re looking for a swanky new vehicle to impress your clients, then why not consider leasing? You’ll get all the advantages of a new car with any long-term commitments.
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