The short answer is that, yes, there are some tax benefits to leasing a car in the UK. But the long answer is that there are many variables that will affect just how much you are able to deduct. Whether the car is used exclusively for business, and even what emissions it has, will impact the amount you can deduct.
Businesses
For medium to large businesses, cars and vans that are leased for employees can be deducted as an expense for corporation tax purposes. Even if you own a small limited company, the cost can still be deducted as a corporation tax expense, provided the car is used exclusively for business use.
Self-employed
If you’re self-employed and use your car for 100% business use, then the whole lease cost is tax deductible. It can be added as an expense to your personal tax return.
Carbon emissions
Before you choose a car lease, remember that the type of car you lease will impact the amount you can deduct. For cars that have more than 50g/km CO2 emissions, only 85% of the lease cost can be added as a deductible to your taxes. This is not true of vans, however.
Vat registered
if your company is VAT registered, and you use your car for 100% business use, you can actually reclaim 100% of the VAT portion of your car lease cost. if you use your car for more than 50% business use, you can reclaim 50% of the VAT cost.
Leasing a car
You’ll also want to weigh up the other pros and cons of leasing a car before you make a final decision. If you’re looking for car leasing in Bristol, then specialists such as https://www.autolyne.co.uk will be able to offer you all the advice you need on what kind of lease will suit your needs.
As you can see, for the best tax benefits the car will need to be solely used for business purposes. Vat registered business owners also get a better tax deal, as do those who lease cars with lower carbon emissions.