Business Car Leasing UK
Business car leasing, also called business contract hire, lets your company use a car for a fixed monthly rental over an agreed term, without buying it. It is a popular way to run company cars and van fleets while keeping costs predictable.
Who can lease a car for business?
Business contract hire is available to:
- Limited companies
- Sole traders
- Partnerships
- Limited liability partnerships (LLPs)
Reclaiming VAT
A VAT-registered business can usually reclaim 50% of the VAT on car lease rentals where the car has any private use, and 100% on van lease rentals where the van is used exclusively for business. The rules depend on how the vehicle is used, so check with your accountant.
Benefit in Kind tax
If an employee or director uses a company car privately, they pay Benefit in Kind (BiK) tax, and the business pays Class 1A National Insurance. The amount depends on the car's list price, its emissions and the tax year. Electric cars have much lower BiK rates than petrol or diesel.
Accounting treatment
Contract hire was traditionally treated as an operating lease, which kept it off the balance sheet. Accounting standards have changed, so many companies must now recognise leases on their balance sheet. How it applies to you depends on your accounting framework, so ask your accountant.
Fixed costs help cash flow
With no large purchase to fund, and the same rental each month, you can budget with confidence and keep capital available for the business. Road tax is included in our deals.
See current monthly prices, including VAT, on our deals page. All applications are subject to status and credit approval.
Frequently asked questions
+Who can get business car leasing?
Limited companies, sole traders, partnerships and LLPs can all apply for business contract hire. Every application is subject to status and credit approval.
+How much VAT can I reclaim?
VAT-registered businesses can usually reclaim 50% of the VAT on car lease rentals where there is any private use, and 100% on vans used exclusively for business. Your accountant can confirm what applies to you.
+What is Benefit in Kind tax?
Benefit in Kind (BiK) tax is a tax on the benefit of having a company car for private use. The driver pays income tax on a percentage of the car's list price, and the employer pays Class 1A National Insurance. Electric cars have much lower rates than petrol and diesel.
+Does a leased car appear on my balance sheet?
It may. Contract hire was historically off balance sheet, but updated accounting standards now require many leases to be recognised on the balance sheet. It depends on the accounting framework your business uses, so check with your accountant.
Swiss Vans Ltd is authorised and regulated by the Financial Conduct Authority as a credit broker, not a lender. FRN 668283.