When you are thinking of leasing a car it can be difficult deciding whether you want to do this personally or through your business. There are of course advantages to both. We are going to outline the difference in this article, so you can make an informed decision on which route to take.
What are the Main Differences?
The main difference between the two is pretty self-explanatory in that when you lease personally it will have nothing whatsoever to do with your company or its finances.
There are 2 different types of personal car lease options, which are personal contract hire, and personal contract purchase. With personal contract hire you have car for a specific period of time (normally between 2-5 years), and you pay a set amount every month. Once that time period is over, you have nothing left to pay. With personal contract purchase everything is same until the very end. You either need to hand the car back, pay a bulk payment to keep the car – or agree on a part exchange deal.
With business car leasing there are 4 options which are: business contract hire, business contract purchase, finance lease and operating lease. The first 2 are exactly the same as the personal leasing options. With the latter 2, these include finance agreements so are a little more complicated.
What are the Benefits of Personal Leasing?
There are some great advantages if you lease with us privately such as:
- You can get a car more regularly (every couple of years). This is one of the most attractive benefits due to the car refresh
- It doesn’t cost as much as you think. You can have a swanky car for much less than you’d think
- Road tax will be included
- You don’t need to pay any company tax
What are the Benefits of Leasing through a Business?
- There are some top benefits to leasing through your business too:
- You’d normally get a better deal
- You can put the car “off the balance sheet” if it’s via business contract hire
- You can claim up to 100% off VAT depending on the circumstances
- Company car tax could be cheaper than if you were to do it privately
Which is More Tax Efficient?
This can be a difficult to answer as it depends on a number of factors including what model of car you want to rent or lease. It can also depend on how much C02 your car emits, and the model of the car. If you wanted something pricey like a Range Rover for example – with the company tax applied to this, you are probably better leasing privately. If you want something that’s a bit smaller scale like a Nissan – then the company tax could be low, so it could be more beneficial leasing through your business.
Hopefully now have an idea of what the main benefits of leasing personally and through your business are – allowing