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Why Leasing Makes Sense for Your Business Fleet

Whether you work alone, or you are the director of a small company or the manager of a multi-national corporation, a business fleet can greatly improve the productivity of your business. It doesn’t matter if your employees are using the vehicle for personal use, you can still lease it through your business and get a great deal. Here’s everything that you need to know about vehicle leasing for businesses, and why it could work for you:

About business car leasing

Business car leasing allows you to rent a car using an upfront payment and a fixed monthly fee which is determined by an agreed mileage. The initial upfront payment is usually three, nine or twelve months of the monthly fee. Leasing deals are usually set over three to four years, and you hand the car back at the end. Mileage is agreed between the dealer and the customer, and if you go over it you will usually have to pay an excess mileage rate at the end of your contract.

The cost of business vehicle leasing

Buying company cars outright can be incredibly expensive, and you’ll have to find a lot of capital initially to fund them. If you opt for business vehicle leasing, you pay a monthly rental fee for a fixed term and you simply hand the car back to the dealership at the end of the contract. Handing the car back avoids the hassle of arranging a sale and having to account for the vehicle losing some of its value over the period that you’ve had it. Business vehicle leasing means that you avoid wasting cash flow on a depreciating asset, and you can simply budget for the monthly cost instead.

Access to new cars

Plenty of leasing companies and dealerships know the value of working with businesses, so this leaves business owners in a great position when it comes to choosing which car to lease. You will usually find great deals on new cars, and the dealers will work hard to win you around by offering incentives and a lower price for business leasing vs. personal leasing.

Safety features and fuel economy

If you lease new cars for your staff, then they will always benefit from the best fuel economy and latest safety features, which could save you money down the line when it comes to putting petrol in your vehicle and accident prevention.

VAT Benefits

Leasing a car for business is subject to VAT, but if you’re VAT registered, you should be able to claim some of the VAT back – in most cases, you’ll be able to claim back 50%. You won’t be able to claim 100% VAT back if the car is used privately, but if the car is used completely for business –i.e. employees only use it to drive to meetings- you will be able to claim 100% VAT back. If you have a maintenance package on top of the business leasing contract, then 100% of the cost is reclaimable.

Corporation Tax

To make the most of your business car lease, opt for a car which has CO2 emissions under 130g/km, and you will be able to save on your corporation tax. When you opt for a car with emissions under this figure, the full amount of the lease cost is reclaimable against the taxable profits of the company.

Will it work for your business?

Businesses will have to make an informed decision on which type of company car finance works for them. You will have to take into consideration your expected mileage, tax arrangements and the type of car that you’re looking for. If you’re looking for a luxury model, it may not have the lowest emissions, which means that you can’t claim back on your corporation tax. If your staff will be using the company car for personal use, you won’t be able to claim all of your VAT back. Lastly, if you expect the car to do more than 10,000 miles a year, you’ll need to make sure you state this upfront to the leasing company or you could face a hefty excess mileage fee if you go over.

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