BUSINESS car leasing can be a means for SMEs to use company cars with low monthly payments and agreed mileage over a contract period – usually between two, three, or 4 years.
The monthly rental is paid for the car’s lease and at the time the lease is up you return the car and then start over.
If you’ve never even thought of it before Here are six reasons you should think about leasing a business vehicle.
1. Fixed Cost Motoring to your business to avoid depreciation
If cash flow is strained and you have capital available is at an all-time low it is not something you’d want to do is connect your business with bank loans and overdrafts that are tied to business vehicles.
Business car leasing eliminates having to come up with the initial capital to fund corporate vehicles, as you pay only the monthly fixed amount – meaning that cost is expected and can be planned for.
Finally, when the term of the contract is up the car is then collected and sold , removing you from the burden of depreciation and managing the sale.
2. Cash flow improvement
The purchase of cars is capital intensive Contract hire is a great alternative. You can invest the cash into the business and get better cash flow
One of the best things concerning leasing business cars is that it’s a second line of credit, which means that you’ll free up cash to invest into your business and eliminate concerns about cash flow. We’ve already mentioned that it is possible to put your money on a depreciating asset when it can be used to fund the expansion of your company.
3. Access to new cars with discount on fleets
With a myriad of lease and contract hire businesses vying for your business, it’s becoming a buyers’ market.
Check around to get the most competitive prices on the most recent models. Make use of the expertise of your leasing company for small fleets to discover the best deal for you.
These fleet leasing companies are experts in this field – and might find you a cheap car you’ve never considered before.
Certain companies also provide the option of price matching So make sure you inquire before making any purchase.
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4. Maintain your staff in latest vehicles, and enjoy improved safety features and better economic fuel efficiency
Your staff and business will benefit from the dependability endurance, durability and outstanding efficiency of the latest makes and models. That will lower your costs as well as their personal expenses also – as well as reducing the burden of company car tax. Plus, should the worst happen, they will be the best protected with the most secure cars.
If you’re VAT registered, you’ll able to receive 50% of VAT back
5. VAT benefits – half of the VAT is reclaimable
Business car leasing will be taxed at VAT. However, on your monthly invoices you’ll be eligible to receive 50% of the VAT back – if you’re VAT registered obviously!
You aren’t able to claim 100% since there is – in most cases – personal use of the car. If your car lease is only used for business purposes – such as when it’s a pool vehicle that is not used for private use – then you are entitled to claim 100 percent of the VAT back.
It’s either way, it’s a tax efficient method of financing your business cars.
If you have an agreement for maintenance in addition to the monthly business car rental that you pay for, then 100% of the VAT on that cost is reclaimable. There’s no limitation.
6. Corporate tax benefits – 100 100% reclaimable for cars under 130g/km.
Pick a vehicle with CO2 emissions under 130g/km and you’ll save on corporation tax as the full cost of leasing is 100% reclaimable against your company’s taxable profits.
If you go above this breakpoint, you can only claim the lease amount against your corporation tax. In order to make the most tax efficient use of your business car lease, you should choose an automobile that is less than 130g/km.
What is the best business car lease right for you?
The decision to decide whether or not to sign an agreement for a business vehicle lease to you SME small fleet will depend on many variables that can change such as the amount of mileage, tax arrangements for personal use and the kind of vehicle.
As a whole as a package, business car leasing can be an effective outsourcing option that could save you time and uses your finances cost-efficiently as a means of financing brand new company vehicles for the SME small fleet.
It’s worth having a look at the internet-based UK car leasing firms to determine what you could obtain for your business.
If you’re not sure, talk to a small fleet leasing specialist as well as your financial advisor to find out the best solution for your needs.