BUSINESS car leasing can be a means for SMEs to operate company vehicles that have low monthly payment and an agreed mileage over an agreed period of time – usually between two, three, and four years.
The monthly rental is paid for the car’s lease and at the end of the lease period you return it and begin the process.
So if you’ve not thought of it before Here are six reasons to consider leasing a car for business.
1. Fixed-cost motoring is a must for any company to avoid depreciation
If cash flow is low and capital is at a premium is the last thing you’d like to do is make your business a subject to bank loans and overdrafts for company cars.
Business car leasing eliminates the need to find the initial capital needed to finance the company car, since you only pay the fixed monthly figure – so the expense is predictable and can be budgeted for.
After the period of contract has expired the vehicle is retrieved and sold relieving you of the stress of depreciation, and managing the sale.
2. Improved cash flow
The purchase of cars is capital intensive and with contract hire, you can invest the money in the company and improve cash flow
One of the most appealing aspects concerning leasing business cars is that it’s a second line of credit, which means that you’ll free up cash to invest in your company and lessen any cash flow worries. We’ve already mentioned that you don’t have to use your money on an asset that is depreciating when it is used to fund the expansion of your company.
3. Access to new cars at discounted rates for fleets
With numerous lease and contract hire businesses trying to get your business, it’s becoming a buyers market.
Be sure to shop for the best prices on latest models. You can also rely on the knowledge of your small fleet leasing supplier to find the best rates for you.
These small fleet leasing suppliers are experts in this area They could even find the perfect car for your budget that you had not thought of before.
Certain companies also provide the option of price matching for a fee, so make sure to inquire prior to making any deal.
4. Keep your employees in most modern vehicles and enjoy new safety features and improved economic fuel efficiency
Your business and staff will enjoy the security endurance, durability and outstanding performance of fuel consumption when driving the most modern models and brands. This will reduce your expenses as well as their personal expenses too – and reduce the risk of having to pay company tax on cars. Plus, should the worst happen, they will be protected by the most secure cars.
If you are VAT registered, you’ll be able to claim 50% of VAT back
For today’s automotive news check out this car blog.
5. VAT benefits – up to 50% VAT that can be reclaimed
Car leasing for business will be taxed at VAT. But , on your monthly bills you’ll be eligible to claim 50% of VAT back , provided you’re VAT registered obviously!
You can’t claim 100% since there’s a the majority of instances – private usage of the vehicle. If your car lease is solely used in business – as when it’s a pool vehicle with no private use then you’re entitled 100 percent back in VAT.
Either way, it’s a effective way to pay for VAT on your business cars.
If you are a member of a maintenance contract as an addition to the monthly business car rental the total of the VAT on that expense can be claimed. There is no restriction.
6. Corporate tax benefits – 100% reclaimable for sub-130g/km cars
Select a car that has CO2 emissions less than 130g/km, and you’ll be able to save corporation tax because the total cost of leasing is 100% tax-deductible against your company’s tax-deductible earnings.
If you go above this breakpoint, you can only claim the amount of your lease against your corporation tax. In order to make the most tax-efficient utilization of a business vehicle lease, you should choose an automobile that is less than 130g/km.
Is a business vehicle lease for you?
The final decision about whether to go with an agreement for a business vehicle lease on you SME small fleet relies upon a myriad of factors that may change, such as mileage, personal tax arrangements and the model of car.
As a whole Business car leasing is a viable outsourcing service that could save you time and money cost-efficiently as a means of funding new company cars for the SME small fleet.
It’s worth having a look at the internet-based UK car leasing companies to find out what you can find for your company.
If you’re still not sure you’re not sure, speak to a lease specialist and your financial advisor to find out what’s right for you.