This leasing disallowance applies to all the VAT, if the vehicle is used only for business and is not made available for private use.
Why buy a car for business?
There are reasons why you might choose to buy a vehicle for your business.
There won’t be any mileage or condition restrictions and it will appear as an asset on your balance sheet.
You won’t have monthly payments appearing on your company accounts, and you won’t have a contract to stick to if you buy the vehicle outright. If you take out a purchase hire agreement, you may be able to extend it to lower your monthly payments.
You can end your agreement early, providing you can pay the settlement figure.
The benefits of business car leasing
As we mentioned earlier, if you lease a car for business you don’t have to worry about depreciation or selling it on.
Vehicle tax is included in the monthly lease payment, and you can opt to take out a service and maintenance package too, removing yet another administrative burden associated with running a company car.
Business car leasing relieves a lot of the pressure for companies around compliance and fleet management.
Leasing can free up money to spend in other ways, and it offers more flexibility than car ownership.
Buying versus leasing for personal use
Is it better to buy or lease your own car for personal use?
Many private users choose to buy one outright, but that leaves them vulnerable to depreciation.
You are the owner of an asset that will decrease in value and, the longer you keep it, the higher servicing and maintenance costs are likely to become in the future.
Personal Car Leasing, also known as Personal Contract Hire (PCH), can provide a much greater degree of flexibility for a driver.
It offers low monthly payments with the option of returning a vehicle at the end of an agreement and replacing it with a new one.
Leasing, under a personal lease agreement, provides a much greater degree of flexibility.
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