Business car leasing can be a means for SMEs to operate company vehicles with low monthly costs and a predetermined mileage for the course of a contract – typically three, two or even four years.
You pay a monthly rent for the car’s lease and at the expiration of the lease you return it and begin the process.
If you’ve never considered it Here are six reasons to consider leasing a business vehicle.
1. Fixed-cost motoring is a must for any company Avoid depreciation
If cash flow is strained and capital is in short supply The last thing you’d like to do is the business to bank loans or overdrafts to corporate vehicles.
Business car leasing eliminates the requirement to source the initial capital needed to finance the company car, since you pay only the monthly fixed amount – meaning the cost is anticipated and is budgetable.
When the term of the contract is up the vehicle is retrieved and sold , removing you from the burden of depreciation and managing the sale.
Find similar car stories over on this motoring blog.
2. Improved cash flow
Cars are capital-intensive to purchase and with contract hire, you can put the money into the company and improve cash flow
One of the great things regarding leasing a business vehicle is that it’s an added credit line, which means you’ll be able to free up funds to invest in your business and alleviate concerns about cash flow. Like we mentioned earlier, you don’t have to use your money to purchase an asset that is depreciating when it can be used to finance the growth of your company.
3. New cars can be purchased at discount on fleets
With a myriad of leasing and contract hire firms competing for your company, it’s a buyer’ market.
Be sure to shop for the most competitive prices on the most recent models. You can also rely on the knowledge of your small fleet leasing provider to locate the most affordable deals for you.
These fleet leasing companies are experts in this area and could find an affordable car that you haven’t thought of before.
Certain companies also provide the option of price matching that you should inquire about prior to concluding any deal.
4. Make sure your employees are in most modern vehicles and enjoy enhanced safety features, as well as better efficiency in fuel consumption
Your staff and business will benefit from the dependability as well as the durability and incredible efficiency of the most recent models and makes. This will reduce your expenses as well as their personal expenses as well as reduce the burden of company tax on cars. In the event of a catastrophe, should it occur, they’ll be protected by the most secure cars.
If you’re VAT-registered, then you’ll be eligible to get 50% of the VAT back
5. VAT benefits – 50percent of the VAT is reclaimable
Car leasing for business can be subject to VAT. However, on your monthly invoices you can get 50% of the VAT back , provided you’re VAT registered obviously!
It isn’t possible to claim 100% since there is in the majority of instances – private use of the vehicle. If the car you lease is solely used to conduct business, for instance when it’s a pool vehicle that is not used for private use – then you are entitled to claim 100 percent of the VAT back.
It’s either way, it’s a tax efficient method of financing your company cars.
If you are a member of an ongoing maintenance contract that is that is in addition to your monthly rental of a business vehicle and you are a business owner, 100% of the VAT on that expense can be reclaimed. There is no limit.
6. Corporate tax benefits – 100 percent reclaimable on cars with a fuel consumption of less than 130g/km
Select a car that has CO2 emissions less than 130g/km, and you will save on corporate tax since the entire value of your lease is 100% tax-deductible against your company’s tax-deductible earnings.
If you exceed the breakpoint, you will only claim of the amount of your lease against your corporation tax. To make the most tax-efficient use of your business car lease, choose an automobile that is less than 130g/km.
What is the best business car lease right for you?
The final decision of whether or not to sign the business car lease option to the SME small fleet is based on a variety of variables like the amount of mileage, tax arrangements for personal use and the kind of vehicle.
In the form of a package Business car leasing is an outsourcing option that will save you time and also use your funds effectively in financing new cars for the SME smaller fleet.
It’s worthwhile looking at the internet-based UK car leasing firms to find out what you can find for your company.
If you’re not sure you’re not sure, speak to a fleet leasing expert and your financial advisor to figure the best option for you.