Leasing a Volvo XC90 for business use: Tax benefits and considerations

The Volvo XC90 is a luxury SUV that is sure to impress. Combining comfort, space, and advanced tech, it is a popular choice for business use.

If you’re in the market for a company car, leasing is a smart option. Not only is leasing tax efficient, it also helps to protect your cash flow and simplify budgeting by breaking up the cost of business vehicles into affordable monthly payments.

In this article, we’ll explore the key tax benefits of choosing a Volvo XC90 business lease and discuss what to consider before you take out a lease agreement.

Why lease a Volvo XC90 for business use?

The Volvo XC90 is perfect for business use. Volvo is known for building stylish, reliable, and safe cars, and the XC90 is a standout model. Offering premium comfort, executive styling, low emissions, and high-tech features, the XC90 projects a chic and professional image.

When you lease the XC90, you get to enjoy all the benefits of driving a state-of-the-art new Volvo without bearing the burden of ownership or depreciation.

Business leasing vs personal leasing: What’s the difference?

Business Contract Hire (BCH) is designed for limited companies, sole traders, and partnerships. When you take out a business lease, the lease is in your business’s name, and the vehicle must be used primarily for work purposes.

Business leases also offer some attractive tax advantages, which we’ll explore in more detail next.

What are the tax benefits of leasing a Volvo XC90 through your business?

If you plan to use the Volvo XC90 primarily for business journeys, then taking out a business lease rather than a personal one can help you make significant savings on tax.

Reclaim VAT

If your business is VAT-registered, you can make a VAT reclaim on business lease Volvo XC90 for up to 100% of the VAT on your lease payments if the car is used solely for business, or 50% if you make some personal journeys in it too.

Benefit-in-Kind (BIK) tax

If the car is used for personal travel as well as business use, it is subject to Benefit-in-Kind (BIK) tax. However, low-emission vehicles qualify for reduced BIK rates. The Volvo XC90 BIK tax rate usually falls within the range of 8% - 16%.

Capital allowances

Business car leasing enables you to claim capital allowances for low-emission cars. This allows you to deduct a portion of the vehicle’s cost from your taxable profits, reducing your overall tax liability.

Corporation tax relief

Usually, lease payments can be deducted from your company’s profits, helping to reduce your corporation tax liability. Vehicles with low CO2 emissions, like the XC90 T8 Recharge, usually qualify for the maximum deduction.

No depreciation on the balance sheet

When you don’t own your business vehicle, you don’t need to worry about depreciation. Because you’re leasing, the vehicle doesn’t count as a business asset and so doesn’t appear on your balance sheet or tie up your working capital.

What else should you consider before taking out a Volvo XC90 business lease?

Business leasing has many benefits, including protecting valuable capital, predictable monthly payments, no depreciation risk, and potential tax benefits. It helps businesses to access newer vehicles and project a professional business image, without huge upfront expenses.

However, before leasing the Volvo XC90, there are a few more things to understand and consider about business leasing.

·       Insurance: You will still need to take out comprehensive business insurance, which can cost more than personal cover.

·       Maintenance: Routine servicing and repairs aren’t usually included in the lease agreement. At LetsTalk Leasing, we offer a maintenance package at an additional cost.

·       Mileage limits: If you go over the mileage allowance agreed in your lease terms, you will need to pay an excess charge at the end of the agreement. Always add a buffer when choosing your limit.

·       Fair wear and tear: You could also incur extra charges at the end of the agreement if damage to the vehicle goes beyond fair wear and tear, as defined by the BVRLA guidelines.

Why choose LetsTalk Leasing for a Volvo XC90 business lease?

Make the right impression, protect our planet, and travel in comfort when you choose the Volvo XC90 as your next company car.

At LetsTalk Leasing, we are proud to be one of the UK’s leading car leasing companies. Our Volvo XC90 business lease deals start from just £776/month. Contact our team to find out more.