It wasn’t long ago that one of the major perks to working for someone else would have been the company car. The bigger the car, the better the status. And yet, these days many employers are opting for the leasing of company cars. In this article, we consider the pros and cons of leasing a business car for your employee(s).
Leasing a business car or fleet
Leasing a vehicle for staff is similar to renting a flat or house, with the obvious advantage being that if anything goes wrong with it, you are not responsible. This also means that your staff will be able to drive relatively new cars at all times, since you can renew the vehicle rather than to fix it or to sell your car for cash. Some companies charge an additional maintenance fee per month, which means they accept liability for any repairs that need carrying out.
There are a number of factors which contribute to helping you make the best decision about whether to lease a car for your business. These include the mileage, CO2 emissions and of course the cost of the model itself. Companies like Car4Leasing explain this clearly, allowing you to make the best decision for your business.
Declare the pennies on your eyes
Regarding the tax, there are two methods of car finance contracts which can help you decide whether leasing is the way to go for you. A finance lease or hire purchase is where you are renting to ultimately buy the vehicle. This allows you to claim Capital Allowances relating to the depreciation in cost. Here, the CO2 emissions play a key role in the amount of allowance you can get back. An operating lease is a straight up lease where you just rent it, like a house and will never own it. The taxes work differently for this kind of lease, as you can claim a tax deduction on payments. Again, the efficiency of the car engine is crucial to keeping costs down.
Benefits of leasing
For your own personal use, leasing might not be the most effective option, but for staff, it saves an initial outlay; protects you from loss of earnings due to vehicle issues; allows for staff to drive trustworthy cars, keeping them new and fresh.
Cons of leasing
Whilst you will know your monthly costs, insurance needs to be third party, which is more expensive, and you will need to be sure that staff drive safely, as the car is ultimately not yours to damage.