Relatively new Ltd Company Lease Vehicle

mrsbunntobe

I'm hoping that the wise gurus on MSE can answer this for me

I've had a lot of different views and advice from everyone I speak to about this.

I run a 1 man Ltd company and expect to run up around 15-20,000 miles over the next Tax year. I'm looking at getting a new vehicle for the business and was looking at a Business lease.

I've been informed that as I've only been trading since Jan 15 the business may struggle with leasing companies...

I've been looking at economic Diesel vehicles, so they'd be well under any Co2 limits for a few years yet.

If the business can't get finance due to being relatively new, What's the best option?

Use Cash inside the business to purchase a Brand New car outright? Purchase the vehicle via a Personal Contract Lease?

I'm looking for the best Tax Efficient method in the long-run

motorguy

Just found this on https://www.contracthireandleasing.co.uk

For businesses (Ltd companies, sole traders, LLPs and PLCs) the criteria usually include:
=> Trading history of at least three years with accounts at Companies House
=> Business bank statements can be requested to display ability to pay
=> Company registration numberManagement accounts may occasionally be used in lieu of certified accounts. This is dependant on the circumstances of applicant
=> Director's address and employment history may be requested
=> A standard credit check is also run for both personal and business users, usually through Experian or Equifax.

I'd use company money and buy a car outright - probably used and not new.

Though seek the advice of your accountant first

motorguy

Actually, i just read on at this article and it talks about non status leasing?

http://www.contracthireandleasing.com/guides/non-status-car-leasing/

motorguy

And found this...

https://www.nationalvehiclesolutions.co.uk/no-credit-car-lease

motorguy

Having said that, £5K would buy you a decent Ford Focus, £10K would buy you a nearly new one, so if the business could support that with cash it might be a better idea.

paddyrg

Maybe that £5k to get a used Focus which you sell after a year and repeat until you're in a position to lease?

I could imagine there's an advantage with VAT for leasing, but your accountant needs to discuss it with you to be sure.

motorguy

paddyrg wrote: »

Maybe that £5k to get a used Focus which you sell after a year and repeat until you're in a position to lease?

I could imagine there's an advantage with VAT for leasing, but your accountant needs to discuss it with you to be sure.

Also the LTD company can lend a director the money to buy a car at a nominal interest rate.

OR a director can have a "directors account" whereby they could take the money out of the business and then subsequently repay it.

antrobus

motorguy wrote: »

Also the LTD company can lend a director the money to buy a car at a nominal interest rate.

OR a director can have a "directors account" whereby they could take the money out of the business and then subsequently repay it.

You or your company may have to pay tax if you take a director’s loan.

https://www.gov.uk/directors-loans/you-owe-your-company-money

citykid5

Sorry don't know anything about business purchases, but I think if you buy a used car that's " vat qualifying " you can claim the vat back, is that correct? If so I know most of the cars sold by v12 sports and classics are vat qualifying as they're mainly ex lease cars

motorguy

antrobus wrote: »

You or your company may have to pay tax if you take a director’s loan.

https://www.gov.uk/directors-loans/you-owe-your-company-money

"may have to" is the key there.

Depends on when and IF you pay it back.

CKhalvashi

citykid5 wrote: »

Sorry don't know anything about business purchases, but I think if you buy a used car that's " vat qualifying " you can claim the vat back, is that correct? If so I know most of the cars sold by v12 sports and classics are vat qualifying as they're mainly ex lease cars

Only for vans, hire companies, taxis and driving schools I believe.

As above, I'd go for a 4/5 year old Mondeo, run it for a year and then repeat, as typcially it should work out a lot cheaper than leasing.

Another option would be to work out if it's more tax efficient on a 45/25p per mile payment to you as an employee to run your own car. 20k business miles = £7000 or 35p/mile that is payable to you tax-free for buying/insuring/maintaining your own car.