Leasing your business’s cars or vans can be one of the most cost-effective and beneficial methods when adding vehicles to your fleet.
Whether you have a handful of company cars on your books or a fleet in the hundreds, there are multiple funding methods, and the one you choose will largely depend on the size of your business and its needs.
If your company is considering how to fund its vehicles, here are some of the main benefits that come with business car leasing.
Flexibility in funding
By choosing to lease your vehicles rather than buying outright, you’re not locking in large amounts of capital funds into depreciating assets.
That flexibility is one of the biggest benefits of leasing a vehicle. Your business will have more working capital that you can utilise in other areas.
By spreading that cost over a set duration, you’re creating a more affordable driving experience and you can relax knowing how much money you’re spending each month, making it more convenient to balance the books, too.
The benefits don’t end with convenience, however. There are a string of tax incentives that can make business leasing a no-brainer for small businesses and large corporations alike.
If the vehicle you lease is used solely for business purposes, you can reclaim 100% of the VAT on the lease payments. If it is a vehicle that you also use for personal journeys outside of working hours, you can still make savings by reclaiming 50% of the VAT on those payments.
If the business in question is a Limited Company, you can use your monthly lease payments to offset your corporation tax. And, if you are a Sole Trader or Partnership, you can also offset your lease costs against your annual tax bill.
Go green
If you’re a company looking to improve your green credentials, leasing an electric car through your business is a fantastic way to take positive steps forward, particularly with company cars.
Electric cars are one of the most cost-effective options for a business looking to increase or improve their company car offerings because of the low Benefit in Kind tax rates placed upon EVs.
They are currently locked in at 2% until 2025, meaning you can make huge savings month on month.
This makes models like the MG4 EV, one of the cheapest electric car lease deals on the market, a tempting option, with impressive range, quick charging times and great technology.
Electric vehicles can have up to 90% fewer moving parts when compared to their combustion engine siblings, so that means less maintenance at a more affordable price.
With the 2030 ban on the sale of new petrol and diesel cars just a few years away, leasing an electric car allows you to stay ahead of the curve.
Planning ahead
Any vehicle your business leases does not count as a liability on your balance sheet, as it would if you were to purchase them outright.
This can be advantageous in the future if you need to apply for credit.
Reliability
Not only are there several financial benefits of leasing, but it also makes driving away in a brand-new vehicle attainable and affordable.
Leasing opens your doors to brand-new vehicles for a fraction of the monthly cost, where you can enjoy some of the latest safety and driving assistance technologies available.
For many companies, their vehicles are the backbone of their business. Their everyday reliability is crucial. At a time when industries are evolving rapidly, ensure your business is not at risk of being left behind by outdated machinery.
Read more:
How your company can benefit from business car leasing