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Leasing a car on personal or professional contact- which is more profitable?

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Leasing a car on personal or professional contact- which is more profitable?

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Whether to lease a car through a personal or professional contact is a question which is asked frequently.

Whether to lease a car through a personal or professional contact is a question which is asked frequently. As a business owner or as a Company Director who wants to lease a car for yourself, you have the choice of either Business Contract or the Personal Car Leasing. In other words, you could also lease your car through the business or lease it in your personal name, and each of this option has its own unique implications, various benefits and different disadvantages as well.

Personal Car Leasing or Business Car Leasing

The major thing which is to be considered when you are thinking about whether to lease a car through your business or personally is the taxing situation for sure. If you lease a car through your existing business, you will indeed have to pay Company Car Tax as some of your consumed mileage will be particularly classed as for the personal use. There is also the Car Fuel Benefit charge in order to take into prime consideration if the company pays for your personal fuel.

However, a car lease through a business has some real advantages for the company as well, which is why most of the companies still lease their cars via the Business Contract Hire which has become a trend over time. A business can significantly claim up to 100% tax relief on the lease rental payments, depending on the emissions of the carbon dioxide of the car. Also, if it is VAT is legally registered, it can also claim 50% of the VAT back on the car leasing the payments (100% on the commercial vehicles), and all of the concerned VAT on the Maintenance element of the particular contract if this is included. Furthermore, all the major expenses associated with this particular business lease such as the motor insurance, servicing and the repairs, are fully tax deductable against the company's profits that are be cumulated. Please note that if the car is for the purpose of business and personal use, the various tax benefits only apply to the business use proportion of the particular expenses.

If you are really willing to go down the Personal Car Lease route, the first thing that is to be to remembered is that you will be majorly making the payments out of the various taxed income and you will not at all be able to claim any of the money back that you have spent in the particular purpose. You will, of course, be very well able to charge the company 40p per mile for all the consumed business mileage that you are travelling for the business purposes, so you will need to keep the accurate records of all your business and personal mileage. Check the CRA website for all the latest information on how much you can actually claim per mile for the purpose of business mileage.

Facts to be known before car lease

If a particular business is completely profitable and is particularly looking to reduce its overall tax bill, it would indeed probably be better to put any Directors' lease cars through the particular business, even if it actually means increasing the salaries of those Directors in order to compensate for the Benefit In Kind tax that they would have to pay.

For More Information, Visit: http://www.lease-a-car.info
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Leasing a car on personal or professional contact- which is more profitable?
 Whether to lease a car through a personal or professional contact is a question which is asked frequently.

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