Over the last decade, we have seen a steady rise in the number of people who are self-employed in the UK. According to a Guardian Newspaper report in 2014, the number was at a forty-year high. There are currently around 5 million people who work for themselves, which is about 15% of the total working population in the country. This is nearly double what the figure was back in 1975.
If these self-employed people need transport they will have to decide what option works best for them. There are advantages and disadvantages to both personal and business car leasing and knowing what they are will help you make the right decision for you.
Business Leasing
As a self-employed person, it’s your individual situation which is going to determine if you are eligible for business or personal car leasing. The rules for business leasing are much tighter, and leasing companies will tend to need at least three months of positive looking bank statements for you to be eligible. If you can’t provide these statements, the personal leasing option is going to be the route you will need to go down, as ultimately you are unlikely to pass the credit check which the leasing company will need to undertake.
If you do qualify for a business lease there are two main leasing options:
- Business Contract Hire – Business Contract Hire is probably what most people mean by leasing. It involves a fixed monthly fee for the allocated amount of time. You usually have to stick to mileage conditions and when the lease is up you give the car back.
- Finance Lease – A Finance Lease works in the same way as the Business Contract Hire that you pay a monthly amount for a given amount of time, however, with the Finance lease at the end you sell the car. The money used to sell the car pays off the remaining balance and any equity on top you keep.
Benefits of Business Leasing for Self Employed
If you qualify for business leasing as a self-employed person, there are some benefits to choosing to lease in this way; just as there are benefits to leasing personally.
- VAT Registered businesses you can offset up to 50% of the VAT on the car.
- The financial commitments of the lease can be “off balance sheet” for business contract hire.
- The monthly payments are fixed
- Road Tax can be included
Personal Leasing
In many circumstances, choosing to lease a car as a self-employed person is recommended. The first is as mentioned above if you can’t provide the business financial reports for your business, then privately leasing your work car is an easy option. Personal leasing is often less hassle. We understand how leasing a car privately works, and there is no need to learn complicated systems or lease agreements. Although, with personal car leasing you won’t get the VAT benefits if your company happens to be VAT registered, however, most of the other benefits apply to personal leasing too.
Similar Posts:
- Evaluating Financing Options for Your Business: Myths and Facts
- Increase Your Business Growth and Cash Flow Through Equipment Leasing
- Benefits of Leasing for Small Business Startups
- Self-Employed 401K: Retirement and Tax Savings Tool for Small Businesses
- Tips on Lowering Your Health Care Costs
loading...
loading...
Leave a Reply