Would Leasing Benefit your Business?
A single vehicle or a fleet of vehicles can be a very costly purchase for a business, so we have put together all the reasons why business leasing may be benefit your business …
- Fixed cost motoring. The cost of a new vehicle equates to a huge initial outlay for a business. With leasing this is not the case, payments are monthly and the cost will be known to you when you sign your lease. This means there is no enormous initial cost and the monthly rental on your vehicle can be budgeted for. If you also chose to take out a maintenance package with your lease, there will be no unexpected motoring costs. Services will all be provided and even new tyres are accounted for!
- No time or depreciation worries. Unless you have chosen a hire purchase option for your vehicle, it will be collected from you at the end of your lease. This means you do not have to find the time to resell the vehicle yourself or need to worry about how far the value of your vehicle has depreciated.
- Cash flow. Spending money on a brand new vehicle requires a large amount of capital for a business. If a business were to lease a vehicle less of this capital will be needed. This means you can allocate your funds elsewhere, like into further expanding your business!
- Latest vehicle = latest technology. Manufacturers are always improving their vehicles to make them as fuel efficient, reliable and safe as possible. If your staff are driving the newest models they can benefit from lower fuel costs and peace of mind that they are protected by the very best safety features should the worse happen on the road.
- Image. Although you would hope customer’s judge your business solely on the ability to provide the best possible service/product … this may not always be true. Customers who see a new vehicle are more likely to think your business is thriving and may be more likely to trust and use your services in the future. A plumber in a new shiny van presents a much better image than one whose van is covered in rust.
- VAT registered? The cost of your business lease will be subject to VAT but … if your vehicle will be used solely for business purposes than you can claim 100% of the VAT back. This would only really apply to vehicles that are kept at the company premises overnight and are never driven be employees for personal journeys. If your vehicle will be used for a mixture of business and personal uses, for example if your employee drives the vehicle from home to work and uses the vehicle on their days off, you can still claim back 50% of VAT. Furthermore, if you have chosen a maintenance option on our lease 100% of the VAT on this cost can be claimed back regardless of whether the vehicle is used for business purposes only or a mixture of personal and business uses.
- Corporation tax. You could save on corporation tax is your business vehicle has emissions under 130g/km. In these circumstances the full amount of your lease value can be reclaimed against your businesses taxable profits.
So have you decided that leasing is right for your business?
There are 3 types of business lease to choose from; Business Contract Hire, Business Finance Hire or Business Hire Purchase. If you aren’t sure which would be right for your business our account managers are always on hand to give you some general advice and help you find the best leasing deal for you!
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The comments above do not necessarily reflect Rivervale's views unless clearly stated.
22 November 2016
Written by Natalie Faughy