This year businesses across most sectors have been hit hard by the pandemic, from lockdowns, to supply chain shortages. And with one in seven UK businesses on the brink of closing, there’s no better time than now to start looking at your business operations. One of the areas you may not have considered is the leasing of business cars.
What is car leasing?
Leasing a Tesla car is becoming an increasingly popular choice for companies and their employees. There are a number of benefits to leasing vehicles, and they’re not all cash flow related.
Improved cash flow: The majority of cars bought in the UK on credit is rising, this is because buying a car outright uses an immediate and large sum of money; money that many businesses don’t have at the minute. Leasing a car allows you to budget for a fixed cost across a pre-agreed period of time.
Avoid depreciation: As soon as a new car is driven off the forecourt it depreciates in value. For a business it doesn’t make financial sense to invest in an asset that doesn’t hold its value. When leasing a business car however, the money you pay each month factors in the depreciation of the vehicle for the duration of the contract.
Improved employee safety: It can be tempting to buy a second-hand car, but leasing a new car is more likely to have extra safety features compared with older vehicles. Plus, all lease cars come with a manufacturer’s warranty – giving you and your employees extra piece of mind when out and about.
Eco-friendly cars save money: Because of the overall lower initial costs of leasing a car compared with buying, you’ll have more of a budget for eco-friendly cars. Not only are these cars better for the environment, but they’re also more cost effective too. In addition, as the UK passes more and more laws in relation to it’s net zero emissions target, you’ll find that taxes on non-eco cars will only rise.
Cheaper than personal leasing: Securing a business lease is usually cheaper than a personal lease because of the VAT breaks that are available. In order to take advantage, your business must be VAT registered, and this will allow you to claim back at least 50% of your initial and monthly costs. If you can prove that the car is purely for business use, and left on the company premises overnight and weekends, you can claim 100% back.