Whether online or through friends, salary sacrifice is something you've probably heard about. Or if not, then it's about time, because salary sacrifice is good news. For you and your finances.

As a leasing company, we'll preach the benefits of leasing any day of the week, and we'll also preach about the benefits of salary sacrifice. That's because we want to do all we can to help make your motoring life that little bit easier.

Not only does leasing a brand new car cost less than through PCP, but when you do it through salary sacrifice, you're making even more savings.

Let's find out how it works.

## How Does a Salary Sacrifice Scheme Work?

Salary sacrifice involves giving up part or all of your income in exchange for a non-cash reward – in this case, a brand spanking new lease car.

What happens is that you'll enter into an agreement with your employer to reduce your gross salary (meaning your salary before tax is applied) in return for a lease on the vehicle of your choice.

## Can Salary Sacrifice Save Me Money?

But what's the difference between salary sacrifice and just straight-out leasing a car by yourself?

Well, the great thing is that salary sacrifice car leasing offers both you and your employer savings on income tax and National Insurance contributions (NIC) in what is the ultimate Win/Win situation.

That's because the amount is taken before income tax and National Insurance are applied, so employees and businesses save on the contributions they pay. Not only that, but the set monthly amount will give you fully comprehensive car insurance, road tax, breakdown cover, MOT, maintenance, replacement tyres and accident assistance all included.

Obviously, every employee is different, and every salary can be different, so the amount of savings you make can vary. But it can be up to 60% when compared with the cost of a personal lease taken out by yourself.

## Can I Salary Sacrifice Two Cars?

It's a bit more uncommon, but yes, there's nothing stopping you from taking out more than one car under the salary sacrifice scheme as long as your employer approves the request.

You also need to make sure that the salary which is being sacrificed (in this case, yours) doesn't fall below minimum wage as a result of leasing two cars instead of one. Not only would that put an enormous strain on your finances, it would also be illegal.

## Benefits of Salary Sacrifice for Employers

* Rewards existing employees and helps attract potential new ones
* No need to provide consumer credit to your employees
* Lower National Insurance Contributions (NICs)
* Improves company image and sustainability credentials by encouraging low-emission motoring through the promotion of electric vehicle salary sacrifice

## Benefits of Salary Sacrifice for Employees

* Save money!
* Save on income tax and National Insurance contributions
* Fixed monthly rentals. No up-front payment
* Full maintenance, breakdown cover and road tax included
* Only pay BIK (benefit-in-kind) tax on a car
* No credit check required

## Any Downsides?

There's no obvious disadvantages to a salary sacrifice scheme in itself, but it could prove problematic in certain life situations.

Let's suppose you leave your job or get laid off during the lease term agreement, meaning that the remaining costs will be left with your employer who will need to either cover the monthly payments themselves or pay an early termination fee. Which is a bit of a kick in the teeth for them.

Or let's suppose you're applying for credit or making a mortgage application. Now, because your salary is reduced through salary sacrifice, you might end up getting disapproved for credit or receiving less on a mortgage. That's because even though you're making overall savings through salary sacrifice, gross salary is what mortgage lenders care about, and you're giving part of that up.

Salary sacrifice might also be problematic if you're on a lower salary, as it's illegal for your take-home salary to fall below the national minimum wage. So just make sure it doesn't fall below the threshold.

## Lean, Mean and Green: Salary Sacrifice Works Best with Electric

Yep, a salary sacrifice is most effective with electric vehicles because the benefit-in-kind (BIK) rate was only 1% in 2021/22 and then will be capped at 2% until 2024/25. For example, if you were looking to get a brand new [Tesla Model 3 lease deal](https://www.leaseloco.com/car-leasing/tesla/model-3) through a salary sacrifice that was X amount per month, through this scheme X amount would be deducted from your gross salary every month. You would then receive your salary and pay tax and National Insurance contributions from this new reduced salary. This means that you are paying less tax than you would if you had the car amount paid through your salary as normal.

For a fixed monthly amount taken directly from your gross salary, you as an employee can receive a fully electric or hybrid vehicle (less than 75g/km of CO2) vehicle, therefore saving overall on income tax and NIC.

You as an employee do not own the vehicle, and the responsibility of the car rests with the employer. The employee is therefore subject to benefit-in-kind tax (BIK) similar to a company car, when using a salary sacrifice scheme. This is where the low BIK rate of 2% (up to tax year 24/25) on pure electric vehicle introduces significant financial savings.

A salary sacrifice car scheme is by far the most cost-effective way to drive an electric car.

## What Happens at the End of the Agreement?

Same as with a standard lease agreement.

At the end of the salary sacrifice scheme, you simply hand the vehicle back and either opt out of salary sacrifice or enter into a new agreement. As long as the terms of the contract have been upheld and you haven't made an absolute pig's ear of the car, there's no extra charges to worry about.

Obvious note: unlike with PCP or Hire Purchase, you're never going to own the vehicle at the end of the agreement, so you don't have to worry about selling the vehicle on or deciding what to do with it.

## Summary

So, is it worth the sacrifice?

The data would say yes. Tax and National Insurance savings don't lie. At the end of the day though, the decision is yours to make. Just remember that you are giving up part of your salary, so if you're thinking of getting a mortgage or similar anytime soon, it's important to get the timing right.

But if you think that a salary sacrifice scheme would be a good move, here at LeaseLoco we have the hottest [car leasing deals](https://www.leaseloco.com/car-leasing/search) on the market for you to choose from. Your dream car could be just a few clicks away . . .

Happy leasing, and happy salary sacrificing!

## FAQs

### Do I need to tell HMRC about salary sacrifice?

Nope, not a whisper. There is no requirement for employers to inform HMRC that you have adopted a salary sacrifice arrangement.

### Can I salary sacrifice with bad credit?

Yes, as there's no personal credit checks. So you could have the worst credit rating on the planet and still enter the scheme.

### Is EV salary sacrifice worth it?

We think so! It definitely works out better than salary sacrifice for non-electric vehicles.

### Can I lease a car through salary sacrifice?

Certainly can. In fact, it's one of the best ways to lease a car.

### Does salary sacrifice avoid tax?

Not completely, but because you're exchanging part of your salary for the vehicle, it means you will be paying less of it.

Wondering what the salary sacrifice car scheme is and whether it's right for you or your employees? We reveal the pros and cons in this helpful guide.

What Is Salary Sacrifice Car Scheme? Updated 2023| LeaseLoco

What Is A Salary Sacrifice Car Scheme?

# Guide To Business Car Leasing & Tax
[Business leasing](https://www.leaseloco.com/business-leasing) is an increasingly popular way for businesses to get a brand new car or van. Through fixed low monthly costs and the simplicity of the process, businesses can manage their cash flow better and free up their time and money to spend elsewhere. The car leasing tax benefits are also a key reason that more and more businesses are making the move to leasing. 

## What Are The Tax Benefits Of Business Car Leasing?

### Company accounts
Any car lease payments will appear ‘off balance sheet’ and won’t appear as an asset or liability on your business balance sheets. This can be a great thing to make your company accounts look stronger to investors when looking for credit. Due to this, your business may be able to apply for more credit lines if your car is a lease as it is not seen as a huge liability. 

### VAT recoverable
One of the best car leasing tax benefits is that you will be able to claim VAT back on your monthly payments, saving you a significant amount of money. You can claim 50% of the VAT back if your vehicle is used for both personal and business use, or you could claim 100% of the VAT if you use the vehicle solely for business use. Any excess mileage charges (if you do go over your mileage amount) and maintenance costs are also 100% VAT recoverable. For this reason, if you think you may slightly go over a certain mileage, it may be more cost-effective to pay the excess mileage charges instead of paying for the higher mileage amount. 

### Bigger savings with electric vehicles
If you have a company car then you will need to pay a Benefit in Kind (BIK) tax charge. This tax charge depends on the vehicle’s value, your earnings and also the CO2 emissions of the car or van. That said, the Government introduced tax rules so that electric vehicle company cars will not need to pay any BIK tax. This is another huge tax saving that can be gained from business car leasing. 

## How Does Company Car Tax Work?
A company car is a great incentive where your employer provides you with a vehicle to use as a benefit on top of your annual salary, usually to be used for both business and private use. As this is on top of your annual salary, the government places a tax on company cars, known as Benefit in Kind (BIK) tax, that you will need to pay. If the company car scheme includes fuel then you will also need to pay tax on this fuel allowance. 

## What Is Benefit In Kind (BIK)?
This is the company car tax mentioned above that you will need to pay if you have been lucky enough to get a company car through your business. The company car has monetary value attached to it if you are using it for private use so the car is named as a ‘Benefit in Kind’. 

## How Are BIK Rates Calculated?
This BIK rate for a company car will be calculated using a number of factors:

* CO2 emissions of the vehicle
* Your earnings
* The P11D value (market price) of the vehicle
* 
Using these values, the BIK rate can be worked out in a calculation where you multiply the P11D value by the CO2 emissions band percentage and multiply this by your personal income tax band percentage. 

Although, it is much easier to head over to the [HMRC tax calculator](https://www.gov.uk/calculate-tax-on-company-cars) to get this figure quickly than to calculate it yourself. 

The great news is that, as the government is striving to encourage people to use electric vehicles, they have introduced a 0% BIK rate for all electric vehicles and low-emission vehicles. This means that if you opt for a [business electric car lease](/car-leasing/search/74439a7645155b90167e6179208cc18d), you won’t have to pay any company car tax – meaning even more savings for you! 

## Are Business Car Lease Payments Tax Deductible?
Yes! For personal lease payments, the amount you pay is inclusive of VAT. However, one of the biggest car leasing tax benefits for business leasing is that you can claim VAT back on the lease payments as mentioned previously (claiming 100% of the VAT if the vehicle is solely used for business or 50% for personal and business usage). 

## Business Car Leasing With LeaseLoco

If you’re ready to take advantage of these company car leasing tax benefits, then take a look at our [business lease deals](https://www.leaseloco.com/business-leasing). We also have a range of [van lease deals](/van-leasing/search) too! LeaseLoco has the hottest deals on the market, and as the UK’s biggest car leasing comparison site, we are sure that you will find a deal for you.

We also have our [personal car lease deals](/car-leasing/search) too if you’d prefer this option.

This guide highlights everything you need to know about tax when leasing a vehicle for business use.

Business Car Leasing - Tax Implications Explained | LeaseLoco

Business Car Leasing Tax Implications Explained

# Business Car Leasing Explained
[Business car leasing](/business-leasing), also often known as Business Contract Hire (BCH), is a popular way for business owners or employees to lease a car through their business, offering some incredible benefits compared to buying a new car. We’ve put together this guide to explain how business car leasing works, who can take one out, the business car lease requirements and how it differs from personal leasing.

## What Is Business Car Leasing?
Leasing a car through a business in the UK is pretty similar to [personal car leasing](/car-leasing/search) (also known as Personal Contract Hire / PCH). If you are looking to take out a lease, you will be paying fixed monthly payments for an agreed period of time to a leasing company for a brand new car, usually for 2-4 years. You will never own the vehicle, or need to pay a balloon payment at the end of the deal. Once your deal term is up, you simply hand the car back and can take out a new lease. 

For a lease contract, you decide the length of the agreement, how many miles per annum you will be driving, and how many months you would like to pay upfront for the lease. Once you spot a deal you like on LeaseLoco, you can get in touch with our leasing partners who are the suppliers of the deals and continue your application for the lease deal. They will discuss a quote and check you are eligible for the deal and that you can provide the appropriate documents to secure the lease.

We have some handy [FAQs](https://www.leaseloco.com/faqs) for leasing if you would like to know a bit more about the process of leasing a car. 

## How Does Business Car Leasing Work? 
As mentioned, when leasing a car under a business, you will agree to the mileage, term length and upfront payment. Then you will pay the agreed fixed monthly payments to the leasing company while you get to drive a brand new car or van for this time. Once the deal comes to an end, you simply hand the vehicle back to the leasing company (who will usually collect it for free). Then, you can get another lease deal and be on the road again in another brand new vehicle. 

You will need to organise insurance yourself for the vehicle, and also any maintenance packages as these are often not included in the business car leasing deals available. However, road tax, breakdown cover and manufacturer’s warranty are all included in lease deals, meaning more peace of mind for you. 

Leasing is a great option as it allows business owners and employees to drive a brand new car every few years without any hassle of needing to sell the car or van when they want a new one. As the payments are fixed, it allows businesses to budget efficiently and free up their money elsewhere as they don’t need to put down a hefty deposit, as they would if they were to buy a car.

## Differences Between Business And Personal Car Leasing
The process of leasing is almost the same between personal and business car leasing, however there are a few differences between the two:

### Name on the paperwork
If you are taking out a personal lease, then you will be putting your name and information on all of the documents and agreements. However, for business leasing it will be your company’s name on the paperwork.

### Documents to provide
As it is your company’s name on the lease agreement, then the information you need to provide to secure a lease will be different to personal leasing. For example, if you are taking out a personal lease you will be asked to provide your personal information and ID, and you will need to pass the appropriate checks including a credit check. For businesses, they will need to provide details about the business, as opposed to an individual, to ensure that the company can make the monthly payments. 

### VAT	on the costs	
Personal lease deals will include VAT in the costs, however through business leasing you can claim VAT back on the costs of the lease. This means that business leasing can often be significantly cheaper than personal leasing. 

## Why Is Business Car Leasing Cheaper Than Personal?
As business leasing is VAT recoverable, it is much cheaper than personal leasing. If you use the vehicle solely for business use then you can claim back 100% of the VAT, or if you use the vehicle for both personal and business use then you can claim 50% of the VAT back. Also, any maintenance packages or excess mileage charges are also VAT recoverable, meaning even more potential cost savings. Although, bear in mind, your company will need to be VAT-registered to reclaim any VAT on the car lease. 

## Who Qualifies For Business Car Leasing?
You may be eligible for a [business car lease deal](https://www.leaseloco.com/business-leasing) if you are any of the following:

* Sole trader
* VAT registered business
* Limited company
* Private limited company 
* Public limited company 
* Partnership
* Charity 

There are also other company types that will be considered for a business lease deal, so if your business does not fall into these categories then it is still worth checking with our leasing partners if this is something they can do and if you meet the business car leasing criteria. 

## What Is Needed For A Business Car Lease?
You will need to provide some details about your business to secure a deal including proof of the company, bank details, accounts, proof of ID and address. Your company will also need to undergo a few checks as part of the application, and will need to pass a credit check. The funder of the deal will need to see that you can afford the monthly payments. Therefore, if you are a new business with little financial history it may be a bit more challenging to secure a deal. 

There are options though, you may be asked to provide some additional information including further bank statements and potentially a director’s guarantee. You may also be asked to pay a higher upfront payment if you are a new business as this will likely improve your potential to secure a lease deal as it is less risk to the funders. 

## Business Car Leasing With LeaseLoco
As the UK’s biggest car leasing comparison site, we have plenty of business car leasing deals available for comparison, and in just a few clicks you can be comparing the hottest lease deals on the market. We also work with high quality leasing companies who have all signed up to our Ethical Code of Conduct, so you can be confident you 
are working with the best companies.

Now that you’ve read our guide about business car leasing explained, head over to our search pages to view our [business car lease deals](https://www.leaseloco.com/business-leasing) or [van lease deals](https://www.leaseloco.com/van-leasing/search) if you’re ready to start your search. 

If you’re still not sure if business leasing is for you, we have a [business car leasing guide section](https://www.leaseloco.com/guides/business-car-leasing) available with lots of handy guides all about business leasing. Otherwise, feel free to drop us a message and we will be happy to help with any queries you may have. 

## FAQs	

### Can you use a business lease car for personal use?
You can use a business lease car for some personal use, however if you do, you won’t be able to claim back 100% of the VAT on the costs, and only 50% of the VAT can be claimed for both personal and business use of the vehicle. 

### Is business car leasing a good idea?
Whether you’re leasing a van for a limited company, or driving a company car, there are some incredible benefits to business leasing including getting a brand new car every few years with very little hassle; saving a significant amount of money by claiming VAT back on the vehicle; improved cash flow; no depreciation worries; and also better looking accounts as lease payments appear ‘off balance sheet’. If you want to know more about the benefits of leasing, then we have a [handy guide](https://www.leaseloco.com/guides/business-car-leasing/benefits-of-business-leasing) that discusses this in further detail. 

### Can any business lease a car?
Businesses can lease a car, providing that they have the right documents and can pass any credit checks so that the funder is assured that they can make the monthly payments. There are standard eligibility requirements for the types of businesses that can take out a lease deal, however there are other less common company types that may also be eligible, so it is always worth checking this with our leasing partners if you are unsure.

If you're planning to lease a car for business purposes, this guide will tell you everything you need to know to get started.

Business Car Leasing Explained - What Is Business Leasing? | LeaseLoco

Business Car Leasing Explained

# How To Choose The Right Company Car For You
[Business leasing](/business-leasing) is one of the most popular options for employees and employers to get themselves a brand new car for low monthly payments. Once you’ve decided that leasing your next car is for you, the fun begins and you get to pick which car you’re going to get! While it is exciting picking your next car, it can be overwhelming with millions of company car lease deals available and different car makes and models to choose from. 

When you’re getting yourself a new company car, you want to make sure you pick the right one. So we’ve put together this guide to help you with key considerations and some of the most popular lease company cars. 

## Key Considerations When Choosing A Company Car

### Budget
First and foremost, you need to have a think about what your budget is for a new company car. We’re confident that at LeaseLoco, there is a deal for everyone’s budget, whether you are looking for [cars under £200 /month](/car-leasing/budget/200), or if you’re looking for a [7 seater SUV for under £400 /month](/car-leasing/search/3c5d4e89facaf8e071d50ff8b3d2afaa). You may want to have a think about your budget for your car and any additional packages, including maintenance and servicing. 

### Fuel type & mileage
You may also want to consider what fuel type would be best for you, which can depend on the running costs of each, the mileage you will do, whether you do a lot of city driving etc. You should check a car’s fuel consumption and insurance costs in addition to the monthly payments you will need to pay.

The mileage you do will also be a key consideration as this will affect your monthly price for the car, and will meant that if you pick a suitable mileage you won’t need to pay excess miles at the end, or fall so far under your mileage that you could have saved money by opting for a lower mileage. 

For diesel vehicles, you will need to pay a higher BIK tax rate than other fuel types which can be costly. That said, if you do enough miles, then the fuel savings may outweigh the additional tax amount for a diesel car. 

### Electric car BIK rates
An electric car business lease deal can be a significant cost saving due to the company car tax rates. At the moment, if you have a company car, you will need to pay a tax called Benefit in Kind tax, as it is a benefit on top of your annual salary. However, the government introduced new tax rules so that any electric vehicles did not have to pay any of this tax for 2020/21 and only 1% in 2021/22, meaning a potential huge saving for going green. 

### What you will use the car for
You will need a car that matches your lifestyle and plans, considering things like:

*	Will my whole family fit in the car?
*	Do I have off-street parking for an electric wallbox charger?
*	 What type of roads will I be mostly driving on?
*	Will I be doing a lot of city driving or long distances?

You will want to consider all aspects of your life and what you will be using the car for. We want to make your search as easy as possible, so on our search page you can filter down on the car body styles, seat numbers, mileage and more to find something that suits you best. 

### Any spec preferences
Another thing to consider is what features of the car are important for you to have whether it be parking sensors, heated seats, built-in sat nav, tinted glass etc. From this, you have a couple of options to consider. You can either get a trim level that includes the features you are looking for, or you can opt for a factory order and add on any optional extras such as these, and compare the costs of both and see which offers the best value. 

## Best & Most Popular Company Cars 2022
One of the biggest considerations is the company car tax you will need to pay, which is why opting for a company car with low or now tax can be cost effective. We have compiled a list of the top company cars to lease for you to give you an idea of some of the better options to choose. 

*	[Volkswagen ID.3](/car-leasing/volkswagen/id3)
*	[Volvo XC40](/car-leasing/volvo/xc40)
*	[BMW 330e](/car-leasing/search/a4964af256ba09fb5dea2eaded25e4be)
*	[Tesla Model 3](/car-leasing/tesla/model-3)
*	[Mercedes-Benz A250e](/car-leasing/search/8225fbee39618e6d5f994646827f56fb)
*	[KIA e-Niro](/car-leasing/kia/e-niro)

### Volkswagen ID.3 

The Volkswagen ID.3 is a great all-electric option for a company with low BIK tax, meaning a financially attractive option. It’s quite spacious inside and can be fun to drive too. You’ll find that it is significantly cheaper than a Tesla Model 3, but offers a similar range with certain battery options. For example, the cheapest Model 3 only offers 254 miles range, however the ID.3’s 77kWh model offers 341 miles! So this car is an affordable option with a pretty good range. 

### Volvo XC40 

The XC40’s electric and hybrid models (Recharge) have also made our list, being a roomy stylish SUV. If you’re heading on long journeys, the XC40 can be a really comfortable drive. The 216bhp T5 PHEV is one of the most popular options, offering a 13% BIK rate in 2021/22 and has 28 miles of electric range. 

### BMW 3 Series 330e

The BMW 330e is a go-to for many executive company car drivers, being comfy and fun to drive. While the petrol and diesel BMW 3 Series BIK rates can be up to 37%, the 300e is only at 11%, meaning an obvious choice for those looking for an executive saloon. You will also be able to cover up to 37 miles on fully electric power and still have the car’s rear-wheel drive or optional four-wheel drive on the road. 

### Tesla Model 3

The Tesla Model 3 has had a lot of attention in the past couple of years and has gained numerous awards. We’re not surprised considering the Long Range trim can do 0-62mph in just 4s, has a 360 miles range, seats 5 people and you will be paying almost nothing in tax for it.

### Mercedes-Benz A Class A250e

The Mercedes A Class has always been a popular choice in the UK with its previous efficient petrol and diesel engines. However, now that Mercedes has spun this into a PHEV offering, it is a great company car option. It is a smaller than a few of the other options mentioned here, but is still a stylish drive. The A250e offers up to 45 miles of pure electric range and a low BIK rate of just 6% compared to it’s diesel version of 34% BIK, making a great saving for business leasing.

### KIA e-Niro 

This electric SUV has one of the best ranges, making it a great company car choice with a low BIK tax rate. It can travel up to 282 miles with its battery and also offers an incredible 451 litre boot capacity, making it a really spacious interior. You’ll find that the hybrid version of the KIA e-Niro will have cheaper monthly payments to lease, but the fully electric aspect means you’ll pay far less in tax than you would with the hybrids. 

There are plenty excellent choices for a company car, but we think these are some of the best options to choose from. Luckily, the filters on [LeaseLoco’s search page](/car-leasing/search) make it really easy to find a car that is suitable for you and meets all of your needs.

You may need to take a bit of time and think about all the key considerations for getting a new company car lease. You could save a significant amount on tax by opting for an electric car, but is the car’s range long enough for your needs?                           

If you’re really unsure about what company car you want to go for, you can always try and narrow down your choices to 2 or 3 options and head to your local manufacturer’s dealership and take them for a test drive to see what you think and what your heart jumps to!

## FAQs	

### Can you choose any car as a company car?
This will depend on your company. Every business may have different options or potential limitations for your company car, meaning you may not be able to pick the exact model you like. This is why a company car allowance may be a better option if picking the exact car is important to you. 

### Does my company car count as income?
A company car is considered to be a non-cash benefit for an employee, so it does not count as income. Similar benefits include accommodation, mileage allowances and subscriptions. However, as it is a non-cash benefit, you will need to pay tax on it if your employer lets you use it for personal use as well as business use (Benefit in Kind tax).

### Should I accept a company car?
A company car can be an incredible benefit to have as you’re not personally tied into a financial contract and your employer is responsible for all of the driving costs. So it can be great for those who drive a lot of miles. However, if you picking the exact spec and trim is important to you, it may be a better option to have car allowance as you will be more likely to get the vehicle you want this way.

### Is a company car a good perk?
A company car can be a pretty good perk to have. Your employer is responsible for all of the driving costs, so there is less for you to worry about, although you will need to pay tax for this benefit. So, it is certainly worth considering cars that have a low BIK rate to keep this cost down low.

Picking the right car to lease for your business can be tricky. This guide highlights everything you should consider to help you make the right decision.

How To Choose The Right Company Car For You | LeaseLoco

How To Choose The Right Company Car for You

# Leasing A Car For A New Business
It can be a bit overwhelming starting up your own business with a million things to think about. One stress being getting a vehicle for your business, especially as a new business with little credit history. A lot of people worry that their new company may not be able to get a car on finance.

One of the available finance options is car leasing for new businesses. There are plenty of benefits to leasing a car or van for your company, taking a lot of the hassle out of your hands. Although that said, if you are a new business then it will be a bit more difficult for you to get a lease.

We’ve made this guide to talk you through if you will be eligible for a business lease and some of the details of new business leasing. 

## Is My New Business Eligible For Business Leasing?
New business car and van leasing is usually aimed at the following businesses:

*	Sole traders
*	VAT registered companies
*	Limited companies
*	Private limited companies
*	Partnerships
*	Public limited companies
*	Charities

So if your business falls into any of the above categories then you will be eligible for business leasing. There may also be other business types eligible, and for those our leasing partners will be able to advise you if you are eligible. 

It is also worth noting that for the majority of lease companies (including the ones advertised on LeaseLoco), it is not permitted to use a lease car as a taxi or Uber vehicle as there are restrictions limiting how the lease vehicle can be used commercially. There will likely be companies that specialise in leasing for taxi or Uber usage, however our leasing partners don’t offer this service unfortunately. 

## Details & Documentation Requirements
If you are looking to take out a business lease, you will need to provide some details including proof of your business, including business bank details, accounts and proof of ID and address. Your company will need to undergo a few checks, including a credit check, as part of the application. This is because the finance company needs to be assured that you will be able to make the monthly payments. For this reason, car leasing for new businesses can be more challenging if they have no financial history. 

If you are a new business (usually less than 2 years old), you may need to provide some additional information that will support your application. Finance companies often will require a number of business bank statements, accounts and potentially a director’s guarantee to show that you can pay the monthly payments. There may also be the requirement to pay a higher upfront payment, but this is only in some cases. 

If you are a business with little financial history, getting a business lease deal will certainly improve your credit rating too for any future finance agreements.

## Benefits Of Leasing For New Businesses
There is a reason why business leasing is one of the most popular options for new businesses, which is down the all the incredible benefits including:

### Can claim back VAT on payments
You can claim 50% of the VAT back on the monthly lease payments if your car is used for both personal and business use. If the vehicle is solely used for business use then you can claim the entire 100% of the VAT back on these payments, saving a significant amount of money compared to personal leasing. You can also claim 100% of the VAT back on any maintenance costs during the lease. 

### No BIK charges for electric vehicles
There is a Benefit in Kind (BIK) tax charge for company cars to be paid. However, if you are leasing an electric vehicle then there will be no BIK charge to be paid, as the Government introduced this as a new tax rule to encourage drivers to go electric. This makes it an even more affordable option for company car drivers who will be going green with their car. 

### Better company accounts
If you bought a car, then you would have a depreciating asset on your books. However, car lease payments are actually great for your company accounts as they don’t appear as a liability or asset on a balance sheet. This is important for new businesses who may be looking for credit and investors, who will look at this to make a judgement of your business. So you may be giving your business more opportunities by managing your cash flow through the low monthly payments that appear ‘off balance’ sheet.

### Flexibility of leasing
New businesses can get a lot more flexibility with their money by paying fixed low monthly payments, rather than a massive deposit to buy a car, freeing up their money to spend elsewhere. You will also save yourself a lot of time and hassle by choosing to lease as you don’t need to sell the car at the end of the term. You simply hand it back and get yourself another brand new car a few years later. The monthly payments will also include road tax, manufacturer’s warranty and breakdown cover in the cost, leaving you even less to organise yourself. 

Want to know more about leasing a car for your business? Check out our hub of [leasing guides](/guides) that we are sure will answer some of your questions.
If you’re ready to start your search for a great business lease deal, then head to our search page to compare the hottest [car business deals](/car-leasing/search/18c90b61779bd7e0ccd7f4f9a96839bf). If you’re looking for a van then we have plenty of [van lease deals](/van-leasing/search) for you to choose from for your new business!
	

## FAQs	

### Can you lease a car through a new business?
Yes, you can lease a car if you are a new business or start-up, although you will need to provide additional information to show that you can afford the monthly payments. You may need to provide bank statements, company accounts, a director’s guarantee or pay a higher initial rental. 

### Is it better to lease a car through business?
This will depend on your circumstances. Business and personal leasing are both rather similar, that said, business leasing can be cheaper than personal leasing as you can claim back VAT on the monthly payments which can be a cost-effective way to lease a car. 

### Can I get a business car lease if self-employed?
Yes you can get a business lease if you’re self-employed, as you are essentially operating as a sole trader. You will still need to provide the appropriate documents and pass the credit checks to be approved for the finance.

### How does a business lease work?
A business lease works almost the same as a personal lease does. The process is very similar, however it is your ‘business’ that will be the name on the agreement and that will be looked at to be approved for the finance. You will also be able to claim VAT back on the monthly payments through a business lease.

Wondering if you can lease a vehicle for your new business? This guide highlights everything you need to know.

Leasing A Car For A New Business | LeaseLoco

Leasing A Car For A New Business

# Benefits Of Business Car Leasing
[Business car leasing](/business-leasing) is an extremely popular method of getting a brand new car for your company, with a range of perks.

We’ve made this handy guide for the many benefits of leasing a car through business that you might want to know if you’re considering getting a lease car through  your company. 

## Key Benefits Of Business Car Leasing

### Better cash flow
Leasing your car is a great way to manage your cash flow as you are able to budget your other expenses around the fixed monthly payments for your lease car for an agreed amount of time. There is also no need for putting a huge amount upfront, which would be the case if you were to buy a car instead. The cost for buying a car outright would massively impact your cash flow, and could also mean that your accounts don’t look as ‘healthy’ to potential investors.  Instead, by leasing a car through low fixed payments, your money is freed up to help other areas of your business. 

### No depreciation worries
A car starts depreciating as soon as you buy it and will continue to do so. Instead of spending your business money on a depreciating asset, you can simply lease your car, paying regular payments and getting to change your car every few years. You will also avoid the hassle of having to sell the car once you want a new one, as with car leasing the car is simply collected for free and you can get another lease organised. Being involved in a business most likely means you are a busy person, and the last thing you want to worry about is having to sell your car. 

### Full warranty on lease cars
All lease vehicles will have a full manufacturer’s warranty included in the first few years of a car’s lifetime, which will usually cover the entire lease period. This gives extra peace in mind for you that a significant amount of potential faults with the vehicle are covered. Not only that, but breakdown cover is also included in the cost of a lease too. 

### Recruitment incentive 
As a business owner, you may be running a company car scheme through your business. This is a great incentive that will attract and retain your employees. Your staff will not only appreciate a car for having the job, but also that the car is brand new as opposed to a second hand alternative. By using lease cars, your employees will also benefit from the latest safety features and other technology on a brand new car. 

## Tax Benefits Of Business Car Leasing
One of the biggest reasons that business car leasing has become so popular is due to the tax benefits available. These will usually be the reasons that businesses opt for a lease over other car finance options. 

### VAT recoverable
If your company is VAT registered you will be able to claim 50% of the VAT back if the car is used for personal and business use. If it is solely used for business use then you will be able to claim 100% of the VAT back. This can be a massive cost saving and makes business leasing significantly cheaper than personal car leasing. You will also be able to claim all of the VAT back on any maintenance costs for the vehicle.

### Company accounts
Car lease payments won’t appear as a liability or asset on a company balance sheet, and instead they will be ‘off balance sheet’. This is extremely important if you are looking for credit and investors as this is what they will look at to make a judgement of your business. For this reason, you may be able to apply for more credit lines with your car as a lease as they are not seen as a huge liability unlike other car finance methods are. 

### No Benefit in Kind (BIK) tax on electric vehicles
If you’re in a lucky position and your employer has supplied you with a company car, then you will need to pay a BIK tax charge. This charge depends on the P11D of the vehicle, your earnings and also the CO2 emissions of the vehicle. However, the great news is that, with the aim to increase the number of electric vehicles on the road, the Government introduced [new tax rules](https://www.gov.uk/tax-company-benefits/tax-on-company-cars) so that company car drivers will pay 0% tax on electric vehicles. So, an even bigger saving made through business leasing!

## Pros And Cons Of Business Car Leasing

### Pros Of Business Car Leasing
*	There will be a much better cash flow for your business 
*	It can be cheaper than personal leasing 
* You won’t have a depreciating vehicle to worry about (or sell)
*	The VAT can be claimed back on the monthly payments (50% if used for personal and business or 100% if the vehicle is solely used for business)
*	You can have your staff driving the latest car models with new safety features
*	Leasing a car is a really simple process, freeing up your time elsewhere

### Cons Of Business Car Leasing
*	You can’t make any permanent modifications to the car 
*	There will be an agreed mileage limit for the duration of the term
*	If the vehicle is beyond fair wear and tear damages, there will be a charge when returning
*	You may need to pay more National Insurance if providing your employees with company cars
*	Employees will need to pay a Benefit in Kind (BIK) tax on a company car to account for the additional value that is being provided on top of their salary (although there is no charge for electric vehicles)

## Business Car Leasing With LeaseLoco
There is no doubt that the company car benefits are pretty great. Not only are there some incredible cost saving and tax benefits, but leasing is often a much simpler and flexible choice to getting yourself a brand new car. 

LeaseLoco is the UK’s biggest car lease comparison site with plenty of [business car lease deals](/car-leasing/search/18c90b61779bd7e0ccd7f4f9a96839bf) – and [van lease deals](/van-leasing/search) too! All of our prices include road tax, manufacturer’s warranty and breakdown cover, and you will get your new vehicle delivered to your doorstep for free. 

If you have any other queries at all, we’ve got lots of handy [guides](/guides) to read or you can get in contact with our team at LeaseLoco over our live chat or website feedback section.

Wondering whether to buy or lease a car for your business? This guide highlights all of the benefits of leasing so you can see if it's right for you and your business.

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