So you need a new car for your business. But do you buy it outright or lease it from a dealer? Leasing is where the company makes fixed payments every month to rent a vehicle or equipment – without ever owning the vehicle or tools. Buying, meanwhile, refers to owning the vehicle or equipment outright. Below, we explore the important points to remember when buying or leasing a company car.
For a start, when you purchase a vehicle outright, you’ll have the option to sell it again later on and get back some of your initial investment. Sure, cars depreciate at a rapid rate, but the longer you own a car the more value there is on reselling at the end, rather than leasing with fixed payments every month with no chance of a return on the payments. Plus, as it’s your own vehicle, you’ll be free to customise it in any way you wish. This extends to driving it as far as you see fit without limitations imposed by the leaser.
If you buy a car via your company, you’ll also be eligible for Writing Down Allowance. Each year this will allow you to secure a tax break via a percentage based on the cost of the vehicle and its CO2 emissions – if the car is new and is a low emitter, then you’ll get a better tax break.
The main con is that buying will need a larger financial outlay. You can finance the deal by paying monthly payments, but even then, these payments will be larger than the lease payments. You’ll also be responsible for maintenance and repairs for the vehicle, which can add to this outlay.
There are useful tax benefits to leasing too: the monthly lease payments are eligible to be considered as a tax-deductible business expense. This should ensure that you claim back a percentage, or all, of the VAT that comes with the lease. Servicing and repairs can also be added to the monthly cost ensuring you’re not stung by any surprising, unfactored bills. And beyond this, you still get to enjoy a brand-new car!
Leases will consider the mileage you need in the deal – if you’re travelling long distances then it’ll cost increasingly more. The main issue though, is that you have no fixed asset. This will make the company less resilient if it enters financial trouble.
Choosing to lease or buy can be a tough decision. But by using a trusted Nissan dealer in Northern Ireland, you know that whichever option you go for, you’ll receive a quality vehicle in the deal.