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What Are The Benefits Of Leasing A Car Through A Business?

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 claim back up to 100% of monthly payments and the cost of additional mileage and maintenance packages as expenses and therefore offset their corporation tax bill. The exact amount you can offset will depend on the emissions of your vehicle, with businesses going green and choosing electric vehicles tending to access the greatest tax deductions.

Option To Reclaim VAT

If your business pays VAT, the tax benefits of leasing a car through a business are extended further. You can also claim back VAT on both the upfront costs and monthly payments involved in a business car lease. If the vehicle is used solely for business purposes, it may be possible to claim up to 100% back, though most VAT-registered companies will be able to reclaim 50%.

Offer Perks To Employees

For employers, one of the key benefits of leasing vehicles is that they can offer perks or incentives to employees. Whether vehicles are made accessible to staff as company cars or a salary sacrifice scheme is offered, the option to drive a new vehicle as part of your 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 have to make greater National Insurance contributions and your employees will be taxed on the vehicle as a Benefit in Kind.

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 an upcoming ban on petrol and diesel vehicles in 2035, 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.