leasing a car

I'm thinking of leasing a new car and was wondering if it was better to go contact hire or personal lease and claim milage etc. I'm self employed but not vat registered. Any thoughts.

Do lease hire on something like a l200 or a navara..drives & feels like a car but for tax purposes is a commercial vechile so you get 100% deductions for both the lease & running costs- but be aware to stick to ur milage & keep it in good nick or youll get hammered with xtra costs @ the end of the lease perios

Got to be honest SP, I have driven an L200 for the past 4 years and it can feel like driving a tractor at times. I must have missed the boat with leasing options and company car's, I just don't get it being honest. As best as I can make out, the tax implications on a company car make it too expensive so my car is mine not the companies. The jeep on the other hand is a company bus but it's used 90% maybe more for company work and I just buy them. I have looked at a few different leasing options but every time I do it works out a lot better value just buying them and selling it again once you are ready for a move. I suppose it depends on what you are buying and how many miles you are going to put on it.

Been looking at a C-Class mercedes. I'm keen to avoid the depreciation of buying a new car and like the thought of just handing the keys back after 2 years and getting a new one!

A car like that would be expensive if it went down as a company vehicle unless you were banging high miles on it. Don't go by anything I say but I reckoned it's better to buy.

aom said:

A car like that would be expensive if it went down as a company vehicle unless you were banging high miles on it. Don't go by anything I say but I reckoned it's better to buy.

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Cheers mate, I'll look at both!

The thing is Al. As i understsnd it if you buy a vechile then obviously it will deprecate. & on your books as a company assest will only take a% over 3 years but will not fully be ofset againsr tax...as a company assest when you sell it the money from the sale has to go back into the company coffers and so is liable for taxing again bit of a tripple wammie just to say you own it...if however you have to lose money or give it to the taxman then a quick buy often allows u to write that tax off....i surgest u speak to your accountant he'll give u the pros & cons...
However with a lease hire of say a nissan navarra as both a commercial vech & lease hire than the full cost of the lease incl ur fuel & running costs are immediatley offset 100%..so in essance the tax man gets to pay for you to drive around in a nice new pick up. That should keep the smile on ur face

Just save the cash jobs and buy a new one and dont put it through the books

Lolo still gotta account on where the vechile or funds came from if you were ever inspected. By the inland revenue.
Much better to keep your declared funds within the company, for better & more sustained cash flow and just pay a relativley small amount for a lease car...its no diffrnt from hiring any other form of plant or matrials

southernpoofter said:

The thing is Al. As i understsnd it if you buy a vechile then obviously it will deprecate. & on your books as a company assest will only take a% over 3 years but will not fully be ofset againsr tax...as a company assest when you sell it the money from the sale has to go back into the company coffers and so is liable for taxing again bit of a tripple wammie just to say you own it...if however you have to lose money or give it to the taxman then a quick buy often allows u to write that tax off....i surgest u speak to your accountant he'll give u the pros & cons...
However with a lease hire of say a nissan navarra as both a commercial vech & lease hire than the full cost of the lease incl ur fuel & running costs are immediatley offset 100%..so in essance the tax man gets to pay for you to drive around in a nice new pick up. That should keep the smile on ur face

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You may well be right SP, and tax laws do change all the time but the last time my accountant explained it to me, it depends on the vehicle you are buying and how many miles you do. I did hear a story about one guy who claimed for a jeep of some description, not sure if it was vat or tax but during an inspection he had to pay everything back as it couldn't carry the minimum load of the time. That must have changed now as my last L200 was fitted with heavy duty springs to get it up to the correct class but my new one didn't need it. The best thing I would do is speak to your accountant who knows your individual circumstances before doing too much.

If you buy it you'll still own it after 3 years and it'll cost roughly the same payments wise as leaseing one which you wont own,as for offsetting against your tax,that's fine if your going to be showing profit,but there's much more plant that can used for that purpose,and you still wont own it.

Showing a profit

Is it not a business expence?? So should go on your tax returns.
Personally prefer to buy and no monthly committments.

bigfish said:

If you buy it you'll still own it after 3 years and it'll cost roughly the same payments wise as leaseing one which you wont own,as for offsetting against your tax,that's fine if your going to be showing profit,but there's much more plant that can used for that purpose,and you still wont own it.

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I think i see where your coming from ...however in my mind set why would you want to own something that has depreciated so much anyway.its not a assest such like ur materials which will earn u profit...its not an investment- its just a vehicle.so for the same money i'd rather have drive around in a new one every few years but with no financial loss.

southernpoofter said:

I think i see where your coming from ...however in my mind set why would you want to own something that has depreciated so much anyway.its not a assest such like ur materials which will earn u profit...its not an investment- its just a vehicle.so for the same money i'd rather have drive around in a new one every few years but with no financial loss.

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And I can see your view SP,but to my mind after 3yrs you'll still have an asset worth around 10k to weigh off your next motor,i think i'm right in saying that the 1st years 100% tax relief,the second year is 50% and the third is 25%,then go and get your next motor and the cycle starts again,there might not be much in it,maybe better tax can clarify which is the best option?:wondering:

bigfish said:

And I can see your view SP,but to my mind after 3yrs you'll still have an asset worth around 10k to weigh off your next motor,i think i'm right in saying that the 1st years 100% tax relief,the second year is 50% and the third is 25%,then go and get your next motor and the cycle starts again,there might not be much in it,maybe better tax can clarify which is the best option?:wondering:

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been doing some digging and I'm on the same wavelength as you. I can spend about the same, 12,000 leasing one for 2 years or buying one, but at least at the end of the 2 years I can weigh it in against a new one. with the lease option, I've spent 12, 000 and got nothing to show for it.

I think it also depends on the type of vechile for example a merc wouldnt be as tax efficient as a navara for example with the purchase of a car the tax is offset over a 3year period..where as a commercial lease isnot.
Also with a car for personel use only a % of it is offset maybe a 70/30 split due to private use...& if ur a limited company and issue urself with a car for personel use then that effects ur personal tax allowance so again a double wammi against you.
But tbh if you got the cash & dont need it in the company than spoil urself...but just remember when going out to see a potential client or site visit..use a van, as theirs nothing thats gonna piiiis people of & lose ur good will than turning up in a posh motor as it gives the imprestion ur earning far too much money lolo

---------- Post added at 07:04 PM ---------- Previous post was at 06:49 PM ----------

gunslinger757 said:

been doing some digging and I'm on the same wavelength as you. I can spend about the same, 12,000 leasing one for 2 years or buying one, but at least at the end of the 2 years I can weigh it in against a new one. with the lease option, I've spent 12, 000 and got nothing to show for it.

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I kinda think you missed the point m8...when u say uve spent 12k & have nothing to show for it......although u'll av spent 12k the tax man would have offset this in full as a trading deduction , so technically u've paid nothing but driven around in a new motor courtesy of the tax man...or you buy it pay monthly on the drip & only caim a small % of ur costs to drive it-eventually when ufinished payin it has depreciated several thousand pounds which u have lost never to see again, if you then sell it u'll have to decare the sale on ur tax return & possibly then pay money from the profit etc meaning ur original 12k is now proberbly worth less than 5k

we no pay congestshun cos they fink were mayors