If you’re about to invest in new vehicles for your business, you’re likely weighing up whether to purchase or lease. Buying your business fleet comes with the certainty of ownership but it’s also a sizeable investment that, for many, is simply not affordable or realistic.
Leasing offers businesses a popular alternative, with different types of deals available to suit varying company needs and allow directors and/or employees to drive a new vehicle. To help you decide which is the right option for you, we have outlined some of the benefits of leasing a car through a business should you be eligible.
Improved Cash Flow Management
One of the most significant downsides of buying vehicles for a business is that doing so is a big one-off expense. This can significantly unbalance cash flow, something that all businesses will want to avoid to maintain stability and protect credit ratings. When you lease a car through a business, however, the impact on cash flow is much less as the overall cost will be spread out through smaller monthly payments which keeps balance sheets looking healthy. Furthermore, spreading the payments frees up more cash that can be used for other liabilities each month.
Payments Count As Expenses For Tax Purposes
Leasing a car through a business can come with significant tax advantages. Limited companies can normally deduct lease rentals, and the cost of a maintenance package shown separately, as a business expense, which reduces the profits they pay corporation tax on. How much of the rental is deductible depends on the car’s CO2 emissions: all of it for cars at 50g/km or less, including electric cars, and 85% above that, because 15% of the rental is disallowed. Your accountant can confirm the position for your business.
Option To Reclaim VAT
If your business is VAT-registered, it can normally reclaim 50% of the VAT on the rentals, including the initial rental, where the car is available for any private use. If the car is used solely for business and is not available for private use, 100% may be reclaimable. VAT on a maintenance charge shown separately can normally be reclaimed in full. Businesses on the VAT Flat Rate Scheme do not reclaim VAT on rentals. Our guide to VAT on business car and van leasing explains the rules in more detail.
Offer Perks To Employees
For employers, one of the key benefits of leasing vehicles is that they can offer perks or incentives to employees. Offering staff a company car, so they can drive a new vehicle as part of their employment package, comes with obvious convenience and can also make the company more attractive to prospective employees weighing up a possible job move. Equally, for current employees, having such a substantial perk like a company car can boost levels of retention and satisfaction, ultimately aiding productivity and saving the business money in the long run.
Do note that there will be additional responsibilities and implications if the vehicle is offered to employees as a company car. You as the employer will pay Class 1A National Insurance contributions on the benefit, and your employees will be taxed on the vehicle as a Benefit in Kind. Our guide to choosing between a company car or a car allowance compares the two routes.
Access The Newest Vehicle Technology
One of the main reasons why businesses consider getting new vehicles is for safety purposes. When directors and staff spend lots of time travelling, it’s important that they can do so safely and the technology fitted in new vehicles makes this possible. By leasing a car through a business, you can choose one of the very latest models and therefore pick a vehicle kitted out with the technology most useful to your business needs. This could be advanced safety features, fuel efficiency improvements, or enhanced connectivity that keeps staff able to communicate on the go.
Embrace Sustainability
With a greater societal awareness of the importance of green thinking and the phase-out of new petrol and diesel car sales, it’s more important than ever before that businesses do their bit to be sustainable. Using electric vehicles is a great way to achieve this, but these cars also come at a premium cost which may only be affordable to businesses opting to lease rather than purchase outright. This is certainly something well worth considering, as not only can electric vehicles help businesses cut down on costs at the pump and therefore on expenses, but can also aid the corporate social responsibility of a company and help businesses demonstrate a genuine commitment to sustainable practices.
Whether you need more advice on whether leasing a car through a business is right for you or are keen to explore the lease options available to you right away, Intelligent Vehicle Finance can help. We have a huge range of models from the top manufacturers in stock and available and can help you find the perfect lease deal for you and your business. Get in touch today to discuss your requirements and options with a member of our team.
Last updated: September 2026.