How businesses can benefit from car leasing
In our latest article we’ve outlined some of the benefits of business car leasing, whether you're a sole trader or the owner of a Limited Company, car leasing offers many advantages when compared to buying a car outright or taking out a finance package
Lower Initial Rental - A major advantage of leasing is that you won’t need to spend big up front. With leasing offers from Little Green Car Leasing you can choose to pay 3, 6 or 9 months upfront and you’ll also have to pay the standard £199+VAT admin fee.
Fixed Monthly Costs - Fixed monthly leasing costs make budgeting a breeze. With leasing, your business is essentially paying for the depreciation of the car, so the total cost is usually much lower when compared to taking out finance repayments to buy a car.Your Road Fund Licence is included in the leasing cost too.
Cash flow benefits - Cashflow will be in the minds of all businesses – everywhere! If your business is buying company vehicles, how is this affecting cash flow? Car Leasing removes depreciating assets from your company’s balance sheet and the associated risks of owning a vehicle, such as depreciation and disposing of the vehicle.
VAT Claim Back - Companies that are VAT registered can claim back 50% of the VAT on the car leasing payments and 100% of VAT on maintenance. But on your monthly invoices you will be able to claim 50% of the VAT back – if you are VAT registered of course!You can’t claim 100% because there is – in 99% of cases – private use of the car. If your lease car is used solely for business – for example if it’s a pool car with no private usage – then you can claim 100% of the VAT back.
Corporation tax benefits – if you choose a car with CO2 emissions under 130g/km you can save in corporation tax as the full amount of the lease rate is 100% reclaimable against your company’s taxable profits. If you go above this breakpoint, you can only claim of the lease amount against your corporation tax. To make the most tax efficient use of a business car lease, go for a sub-130g/km car.
Maintenance -Taking out a maintenance package gives you great peace of mind and again is a good way to budget.
Reduced Administration - All of the administration of the vehicle is handled by the leasing company, saving you precious time and if you have a number of cars in your fleet you might be eligible to use free Fleet Management software such as Fleet Manager Plus – helping with administration time further.
Leasing companies will offer you impartial but expert advice. A leasing company will not try to sell you a specific make or model and will be focussed on finding the very best vehicle for you, fitting the needs of your business and the driver.
New cars have better safety features and fuel economy - Leasing brand new cars for your business will ensure that you all benefit from the safety features present on all modern cars and the fuel economy of driving a new vehicle. Reliability is also a factor, you can be confident that newer cars will incur lower costs and should anyone be involved in an accident safety features of new models will offer protection.
Rewarding your people - Employee engagement is often reported as key to a successful business and by offering your teams the opportunity to drive a brand-new car, which is replaced after 3 or 4 years is an excellent way of saying ‘thank you’ and a great addition to any employment package. The National Employee Research Survey showed that over 90% of employees feel employee recognition is important at work – a car as part of a remuneration package.
You’re in charge of choice - From the vehicle you want to drive, to your upfront payments and monthly costs you are in charge. You can also choose how long you lease the vehicle for and what your annual mileage will be.
No finance agreement should be entered into lightly so do consider the following before you agree to lease.
Budget for the future - It’s important to be certain that you can meet the payments you’ve agreed to for the duration of the contract. You might have your eye on the latest top of the range 4x4 but is this realistic ...... don’t get carried away!
Early Termination Costs - If you need to terminate your car leasing contract early, you will be asked to pay a fee, typically 50% of any outstanding rentals.
Mileage -Customers that exceed their agreed annual mileage will be charged with an excess mileage at 'pence per mile' rate set at the start of your contract. Don’t underestimate your mileage just to get a cheaper monthly cost - it won’t work out to be cost effective.
Fair Wear and Tear - Customers must return the vehicle in a well-maintained condition. Any damage over and above “Fair Wear and Tear” will be subject to additional charges. Read more about Fair Wear and Tear
Insurance - Always factor in the cost of insurance. The leased vehicle must be insured with full comprehensive cover and for business lease agreements, the insurance certificate should be in the company name or a director's name.
If you're interested in finding out more contact our friendly team today.
Low Emission Zones - here's what you need to know.
Clean air zones have been hitting the headlines this year with more towns and cities announcing the introduction of zones.
We have summarised some of the key information below which we hope is helpful for you. Our team are fully trained to ensure they can answer your questions on emissions and which vehicles will be exempt from clean air zones. Contact us today via our website.
What are clean air zones and low emission zones?
Clean air zones are being set up in areas where air pollution exceeds legal limits and the local council have decided to take action to reduce emissions.
The measures taken range from improving traffic flow to charging the most polluting vehicles a daily rate to enter the zone, in a bid to deter them.
Government rules state that any income from the zones are used for operating costs or for other air quality measures – they are not for profit.
Not all clean air zones involve vehicle charges. Some councils have stated they can improve air quality to acceptable levels by adjusting traffic light timing, for example, to keep traffic flowing. Other introductions can be a park and ride schemes.
Those councils who are planning to charge will do so using automatic number plate recognition cameras (ANPR) to track vehicles and check their emission rating.
What vehicles are exempt from clean air zone and low emission zone charges?
All clean air zones are expected to comply with Government guidelines which make the most modern and cleanest vehicles exempt from charges.
These vehicles comply with recent emission standards known as Euro 4, 5 and 6. These include:
- Petrol cars meeting the Euro 4 standard or later (including virtually every car sold since January 2006)
- Diesel cars that meet the Euro 6 standard (including virtually every car sold since September 2015).
- Electric cars
A Euro 6 standard for diesel vans became mandatory for new vans in September 2016, so the majority of compliant vehicles are relatively new.
Lorries and coaches registered since 2014 will also be exempt, as will motorbikes sold over the past ten years.
What are the charges?
Drivers in London who do not meet the emissions will pay £12.50 per day to drive in the zones. The other towns and cities that are introducing zones between now and 2020 will likely charge a similar amount.
Diesel drivers will be worst-affected, as most diesel cars sold before September 2015 don't meet the latest emissions standard.
The majority of diesel vans sold before September 2016 will need to pay too.
Petrol vehicles produce fewer harmful compounds, so cars built since 2006 will be unaffected, along with all electric cars and most hybrids.
Where are the Clean Air Zones?
London's ULEZ scheme will come into force from April 8, imposing daily tolls of £12.50 per day for affected cars and vans. Lorries that don't meet the standard face £100 daily charges.
Birmingham and Bath plan to set up similar schemes in 2020, charging £12.50 and £9 per day respectively. Eventually, almost 20 councils could set up clean air zones, including some Scottish cities that plan to ban older vehicles from driving in city centres altogether. Other areas, including Leeds and Sheffield have proposed zones that only charge lorries, buses and taxis - not private cars or vans.
Below is a list of zones that are expected to appear by 2020.
Aberdeen, Bath, Birmingham, Bristol, Cambridge, Cardiff, Derby, Dundee, Edinburgh, Fareham, Glasgow, Leeds, London, Manchester, Oxford, Reading, Sheffield, Slough, Warrington, York.
Looking to the future stricter limits are anticipated, with some saying that petrol and diesel cars will be banned from some cities entirely by 2030.
If you would like any further information about leasing a car that is exempt from charges, contact our team.