Can the self-employed (sole trader/partnership) lease a car?

Are you self employed, a sole trader or partnership and looking to lease a car? Read all about car leasing for the self employed in our leasing help and advice article...

Why should sole traders select a lease car?

1. A brand-new car every 2-4 years – any business owner needs reliability (and a little comfort) when performing duties. With the ability to include maintenance (via a funder-maintenance package), you can fix all of your motoring costs and bring about a cost-effective solution;

2. A tax-efficient solution – the amount you pay per month on your vehicle can be offset against the tax you pay every year in your annual returns. Unlike purchase-style products (cash purchase and hire purchase) which operate on a write-down allowance, contract hire offers a more straightforward approach to tax. For those businesses who are VAT registered, you can claim up to 50% of the Vat on the finance rentals and 100% of the Vat on the maintenance rentals. However, please do note that you do not have to be Vat registered to lease a car!

3. Convenience/practicality – contract hire is ideal for those businesses people who do not want to engage in the buying/selling of vehicles or who do not want to spend considerable time fixing and resolving a used car. A contract-hire agreement is a fixed term agreement with no ownership attachments. This means that at the end of the contract, the car is returned to the finance company, regardless of the car’s value at auction. Apart from any damage in excess of the fair wear and tear and/or excess mileage, you are not liable to pay anything further for the vehicle. For a busy business, this means they can concentrate on working rather than fleet management.

Can self employed, sole traders and partnerships lease with a low/ no deposit?

To help distinguish financial products in the automotive industry, finance companies and brokers have tried to re-word some of the phrases to ensure a customer completely understands the product. With contract hire, the first payment you make is called the Initial Rental - we do not say deposit as this infers that you may get the money back (you don’t!). Unlike other finance products, contract hire is not an interest-led product, in that the amount of initial rental you pay will not influence the total cost payable on the contract. For example, if you see a deal for £300 inc Vat and this is based on a 6-spread initial rental, then you would need to pay £1800 inc Vat in month 1. However, this is not a compulsory figure to pay; you can elect to pay less or more per month based on your individual or business circumstances.

Learn more about no deposit leasing here or be sure to check out further car leasing help and advice and our car lease blog for more info on leasing.