If you need transportation for your limited company, you may wonder what your options are. Leasing a car is a great way to get a reliable vehicle without the financial burden of buying. Having a car can help your business grow and appear professional. But, you may wonder, can I lease a car through my limited company? 

This guide will look at leasing a car through your limited company, including:

  • Can I lease a car through my limited company? 
  • How do I lease a car through my limited company?
  • Should I lease a car through your limited company?

Can I lease a car through my limited company?

You can choose to lease a car through your limited company. It is important to understand that registering your business as a limited company makes it a separate entity from you. This means that leasing a car with your limited company is different from leasing it personally. 

If you lease a car through your limited company, that car is part of your business. You will need to use it for business operations. If you lease it personally, it has no connection to your business, even if you use it for business operations. 

Consider if you need the car for your limited company. For example, a company car may not be necessary if your business is primarily digital or remote. But if your business requires client calls or in-person meetings or services, a company car may be helpful. 

How do I lease a car through my limited company?

Leasing a car, rather than buying, means you could have a new car every few years without the burden of buying. So leasing a car for your limited company means saving upfront costs and maintaining reliable transportation. When leasing, you also avoid vehicle depreciation and costly maintenance. 

Budget for your lease

To lease a car, you will need to budget for the monthly fee of that lease. You will also need to budget for petrol unless the car is electric. Aside from these monthly expenses, you’ll need to budget for leased car insurance and taxes for your company car.  

A monthly lease payment varies depending on the car. Typically, monthly leases can cost anywhere between £100 and £1000 per month. It is typically cheaper to lease a car for business. 

Leasing a car through your limited company means that you will need to pay company car tax on the vehicle. The company car tax amount depends on the CO2 emissions of your car, the car’s value, and the tax bracket of your business. If you plan to lease a van or truck, you will instead pay a fixed rate tax depending on your tax bracket. 

Find the right car for your business needs

Next, you’ll need to find the right car to lease for your limited company. Consider what your company needs in a car. If your business uses large equipment, you may need a truck or van. If you’re only driving to meet clients, you may want to look into electric, hybrid, or low-mileage options. 

You can look at companies that offer business leasing like Nationwide Vehicle Contracts, Peter Vardy Leasing, or Select Car Leasing to find the right vehicle for you. Once you find the right vehicle, you’ll need to cover it with sufficient car leasing insurance. 

Should I lease a car through my limited company? 

So you can lease a car through your limited company. But first consider whether it’s the right option for your business. 

Reasons to lease a car with your limited company 

If your business requires a lot of transportation, you will likely need a car to succeed. Driving the latest models for your business can help you appear professional to your clients. There are also often deals on leasing business cars, so it could be the right financial decision. 

If you choose to lease a car personally, it may mean paying Vehicle Excise Duty (VED) and VAT. But if your limited company is VAT registered, you can claim back VAT on your company car. This may even out the costs of company car tax and save you money in the long run. In the end, a business lease may be cheaper and more tax-efficient if the car you lease is economical. 

Reasons not to lease a car with your limited company

Leasing a car means you will have to pay a monthly fee for the set amount of the lease. You should be aware of these continuous charges before you decide if it’s right for you. Be sure to ask yourself if a car is essential to your business. 

You may instead choose to lease a car personally and use it for your business when needed. This will allow you to drive a new car without it belonging to your business. 

At times, leasing a car through your limited company may be more expensive than leasing it personally. Depending on your car’s value and it’s CO2 emissions, you may end up paying more than you would with VED under a personal lease. Leasing personally may end up saving money depending on the vehicle you decide to lease.

Save time managing your finances with a simple app

Financial management can be stressful and time-consuming when you’re self-employed. That’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here.

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