Business Car Leasing Explained
Business car leasing, or business contract hire, means paying a fixed monthly amount to use a new car for an agreed term, then handing it back. Our business car leasing page covers the full range. This guide explains the key points.
Who can lease a car through a business?
Most UK businesses can apply:
- Limited companies, including one-person companies
- Sole traders
- Partnerships and LLPs
Every application is subject to a credit check, so approval is not guaranteed. Newer businesses may be asked for more information.
VAT on car leasing
If your business is VAT registered, you can usually reclaim 50% of the VAT on the monthly rentals where the car is available for private use. The remainder is a cost to the business. The rules can differ if the car is used purely for business and is not available for private use, so ask your accountant before you decide.
Benefit in kind (BiK) tax
If you or an employee drives a leased car privately, including commuting, it is usually treated as a taxable benefit. How much tax is due depends on the car's list price, its CO2 emissions and the driver's tax band. Rates for 2025/26 and later years are published by HMRC, and they are generally lower for electric and low-emission cars. We cannot give tax advice, so please check the current rates on the HMRC website or with your accountant before you choose a car. Our BiK-friendly electric options are a good place to look.
Why leasing often beats buying
- Fixed costs. The monthly payment stays the same, which makes budgeting simple.
- Cash stays in the business. You are not tying up capital in a car that loses value.
- No residual risk. The funder carries the risk of what the car will be worth at the end, not you.
- A newer car. You can change cars regularly, with the manufacturer's warranty in place for much of the term.
What to watch for
Stay within your agreed mileage, because excess mileage is charged per mile. Return the car in fair condition. And remember that you are renting, not buying, so you will not own the car when the contract ends.
Next steps
Browse monthly prices on our deals page, or read what is contract hire for the basics.
Swiss Vans Ltd is authorised and regulated by the Financial Conduct Authority as a credit broker, not a lender. FRN 668283.