Car leasing is a good idea if you want to ride a car without actually buying it. Be it for financial problems or just for the fun of driving most of the new cool models arriving in the market, leasing is the solution to all your needs. There exist hundreds of business firms with variety of rent options to choose from. It is becoming a popular option for the citizens and the business holders for the benefits and profit it offers.
If you happen to be working in an established company which has the facility to offer you the chance of acquiring the lease car through business, you have two choices to choose from, either you can get the lease car through your business or can avail it personally. Just like anything else, both the options have their own implications, advantages and disadvantages. Choosing between these two depends on your particular financial requirements and constraints.
The main parameter that plays a key role in deciding among the above two is the Tax. First let us look in to the benefits and odds with business leasing. Leasing a car through your business will make you pay Company Car Tax, because some of your mileage will come under personal use. The Car Fuel Benefit charge is another point to consider if company is paying for your personal fuel. Looking other way around, leasing a car through your business has major advantages. A 100% tax relief can be claimed on the lease rental payments which depend on the CO2 release of your car. As much as 50% VAT can be claimed back on car leasing payments including all of the VAT on maintenance element of the contract if this is included , if the car is VAT registered. This claim can be 100% in case of commercial vehicles. Expenses including motor insurance, servicing and repairs, are fully tax deductible against the profit of the company.
Let us now turn in to personal leasing. In case of personal you have to pay out of taxed income and you are not allowed to claim any money back. Any profitable business looking for reduction in tax bills may consider leasing car for its Directors or CEO through business lease option, but it needs increase in the salary of those persons to compensate for the Company Car Tax they would have to pay. Keep in mind that if the car is for business and personal use, the tax benefits only apply to the business use proportion of the expenses.
It is always advisable to discuss the matter with your financial advisor and accountant who is the right person to suggest based on your tax and financial situation. Considering all of the above mentioned criteria, always make a right decision before making any financial deals so that you don’t have to regret after that.