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Am I Eligible for a Business Lease and what are the Benefits?

Am I Eligible for a Business Lease and what are the Benefits?

When looking at leasing a new car or van you often see two different prices, one for a business lease and one for a personal lease.  We explain who can apply for a business lease ...

What are the benefits of a business lease?

With a business lease the company will be paying the monthly rentals not the individual.  For some businesses this may be the most cost effective way to lease a car or van for the following reasons;

Benefits of Leasing for a 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, rentals are monthly and this commitment 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 likely be no unexpected servicing costs. 
  • No depreciation worries.  If you choose a contract hire agreement for your vehicle it will be returned 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 (mileage and conditions apply).
  • Cash flow. Buying a brand new vehicle requires a large amount of capital outlay for a business. If a business were to lease a vehicle less of this capital will be needed.
  • VAT registered? The cost of your business lease rental will be subject to VAT, but in some cases you can claim up to 100% of the VAT back. 
  • Corporation tax. You could save on corporation tax depending on the emissions of your business vehicle.  In some circumstances part or the full amount of your lease rentals can be reclaimed against your taxable profits.

The main attraction of a business lease is to reduce the whole life cost of any company vehicles which would not be possible if the vehicles were acquired through a personal lease. Contract Hire is currently 'off balance sheet' which may benefit your company's accounts.  

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Leasing is generally accepted to be the most tax efficienct way of running your company vehicles.  However, this is not the case for every business,  and your Accountant would be able to advise you of the benefits a business lease based on your individual circumstances.

Who is eligible for a business lease?

 To qualify for a business lease your company would need to be one of the following;

  • Sole Trader
  • Partnership
  • Limited Company
  • Limited Liability Partnership
  • Public Limited Company 
  • Charity

There are some other less common company arrangements that could also be considered for a business lease.  One of our Account Managers here at Rivervale will be able to advise you if your business will qualify.

Read More: Vehicle Funding Options for Businesses Explained

What information would I need to provide for a business lease?

The checklist below shows the information every business will be asked to provide to enter into a business lease.  

Company Details

  • Name 
  • Address
  • Company registration number (if applicable)
  • Annual turnover

Director, Partner or Principal Details

  • Name
  • Date of birth
  • Marital status
  • Home address

Business Bank Details

  • Bank name
  • Account number
  • Sort code

You may be asked to supply additional information to support your application.  This is likely to include;

  • Business bank statements
  • Management accounts
  • Filed accounting information

Where the hirer is a Limited Company the Director may also be asked to act as a guarantor.  In the event that the company is no longer able to pay monthly rentals, the Director will need to make the repayments.  The finance company may also ask for a higher initial payment to be made in some circumstances.

If you need any business leasing advice our Account Managers are always happy to answer any questions.

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