One man company - car lease options

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sinbadsailor

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What is the best way to take a company car. I am a one man software company and am looking to run a vehicle through my company.

Contract Hire, Car Lease/Lease Purchase etc.

I have no experience in running a company car and what it entails

Any help appreciated
 
I'm in a similar position and I just picked up a jeep under a finance lease with the bank. Basically, the bank puts up 100% finance on the vehicle and I pay back the monthly installments and claim the VAT back on each payment every month. It's the most popular way to finance vehicles as far as i know but everyone's circumstances are different. I'd suggest giving Lombard a ring and ask some questions. They're really helpful and they explain everything in detail. All the big banks would have this service but I got a really good rate from Lombard as I bank with Ulster Bank.

Not sure you're looking for a commercial or not but BIK will be a big factor if it's not a commercial.
 
Vehicle wise I wouldbe looking at a Land Cruiser SWB or any number of saloon cars....so does BIK differ then depending on commercial or not? BIk is for private use essentially isn't it?
 
I just bought a LandCruiser SWB on Thursday, and love it!!

As for BIK, I think if you get a car (i.e. not a commercial) then the BIK is levied on 30% of it's value at purchase for the duration of the term. So, if you finance the car over 5 years, then you will be paying the same level of BIK in year 5 as you did in year 1, even though the car value is nowhere near what the value was in year 1. This why a lot of people change their company cars frequently, after say 1 or 2 years.

For commercial vehicles, I think the BIK is 5% only. Plus tax is only €253. If you buy a 2.9 diesel car (vectra, mondeo,...) then your tax will be a lot more.

I may not be 100% on this as I'm new to it myself, but I'm just trying to remember all the things my accountant told me a few weeks back.
 
the posters are correct. A commercial diesel vehicles will be the most beneficial to you and yoru business.

Firstly the BIK is 5%.

The road tax is less.

The business will benefit from a tax deduction on the interest or lease charges.

Vat is available to reclaim on the diesel.

The only thing to watch is that you will need commercial insurance which will cost more than your normal car insurance.

If you purchase a car then you will have the extra BIK and also the vat is not allowable even if it is a diesel.

In terms of finance you have a few options.

Contract Hire, Finance Lease or Loan.

Contract hire and a lease will be similar in that you will be able to reclaim the vat over the life of the lease.

If you borrow using a commercial loan then bear in mind that you will be able to reclaim all of the vat on the purchase as soon as you buy it. This will mean that you will be able to reduce you debt straight away by 21% so make sure the bank will not prenalise you for this lump sum repayment.

If you are starting out in business and worried about making too many commitments in case the business fails or you need to stop working at it for a while then conider the contract hire. The costs here will be slightly less than a normal lease and your business will never own the vehicle but if anythign goes wrong you can terminate the agreement a lot easier than either a loan or finance lease.
 
ButtermilkJa said:
As for BIK, I think if you get a car (i.e. not a commercial) then the BIK is levied on 30% of it's value at purchase for the duration of the term.
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Beware, this is not quite right. The BIK is based on the value of the car when new. In other words, if you buy a three year old car for €15,000 which cost €21,000 new, the BIK will be assessed on the €21k - not the €15k second-hand value which you paid.
 
It looks like it willbe 4x4 commercial then so. I have read good things about the Land Cruisers and it was on my list, but with the high level of BIK on cars and the fact you cant reclaim the VAT on diesel for a car, the 4x4 is the only way to go company wise then I guess.
 
Another thing to consider depending on how practical it is for you and I do it myselfis to get a classic car as your company car. I have a company car and drive a classic Jaguar sports car. The BIK is nominal. As the BIK is based on the original market value of the car and is not affected for inflation. The car only cost a few pound "in old money" and the BIK is still based on that.

That the car cost me €12k is ignored. The original price was about £2,500, the BIK is based on this so its costs me less than €200 per annum.

If you will be doing a lot of milage it is probably not practical.
 
I don't think that would be a great fit for me really.
I need somethign durable, comfortable and relatively frugal on diesel
as I will be doing 750+ miles per week

I hear the landcruisers are bonb proof so they seem attractive at the moment
 
I presume if you get a lease trough a sole trader to get a private car (sometimes used for business) then you cannot claim back the VAT on the monthly repayment ?
 
command said:
Another thing to consider depending on how practical it is for you and I do it myselfis to get a classic car as your company car. I have a company car and drive a classic Jaguar sports car. The BIK is nominal. As the BIK is based on the original market value of the car and is not affected for inflation. The car only cost a few pound "in old money" and the BIK is still based on that.

That the car cost me €12k is ignored. The original price was about £2,500, the BIK is based on this so its costs me less than €200 per annum.

If you will be doing a lot of milage it is probably not practical.
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If you're doing any mileage, it's not practical!

One of the joys of classic car motoring is that feeling of relief you get whenever you reach your destination without breaking down, or surviving some other problem.

By all means go the classic route and maximise the BIK benefit to fund a hobby, but don't imagine it's a practical proposition.

I speak as a past owner of about four or five such cars over the years....
 
it might not be practical for all buinesses but on the plus side your clients and competitors will never know if your business is doing well or not. If you call to client in a ten year old micra or a brand new merc you are making a statement about your business. Pulling up in a 30 year old Jaguar says different things.
 
ubiquitous said:
Really? Maybe you are merely making a statement about how much you are willing to borrow in order to buy a car?
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It might seem shallow but the car you drive reflects your business standing and depending on the business you're in, this may be important. For example, a top-of-the-range Merc/BMW etc might not be a good idea if your customers feel you must be charging them over the odds to pay for it. On the other hand, driving an old banger might say you're not successful and might cause a customer to question your abilty.

A lot depends on the type of business you're in and the status of the customers on whom you depend.
 
I know this may also seem shallow but I sometimes jokingly say to people that I measure my success ( as their accountant ) on the cars my clients drive. :)
 
gallantman said:
I presume if you get a lease trough a sole trader to get a private car (sometimes used for business) then you cannot claim back the VAT on the monthly repayment ?
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Iam a bit confused by this statement, I thought that if you are VAT registered then you can claim the paid VAT back a year end, also I thought that as sold trader if you have picked car lease option with private car, you are only entitled to claim for a max of 23K of vehicule cost spread over the x year lease, I may be wrong but the tax people didn't know either.. can anyone confirm/deny/clarify?
 
Graham_07 said:
I know this may also seem shallow but I sometimes jokingly say to people that I measure my success ( as their accountant ) on the cars my clients drive. :)
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Ah, but what about the car YOU drive?

I'd say it's a balancing act. Anything too old/cheap and they'll question your ability. Anything too new/flashy and they'll question your invoices!

Such tough decisions.....
 
ang1170 said:
Ah, but what about the car YOU drive?

I'd say it's a balancing act. Anything too old/cheap and they'll question your ability. Anything too new/flashy and they'll question your invoices!

Such tough decisions.....
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How about something slightly older but flashy...good balance ???
 
Does a struggling salesman start turning up on a bicycle? No, he turns up in a newer car - perception, yeah?

David Brent
 
Was once told that "when times are good it's very important to dress well and drive a good car, but when times are bad its even more important to dress well and drive a good car"....a note of caution perhaps to any estate agent thinking of downsizing from a Bentley to a BMW.
 
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