If you're leasing a car, chances are you'll have to pay some sort of tax against the cost of leasing the car.
How much tax you have to pay will depend on your circumstances and whether you choose to lease as a personal or business customer.
In addition to this, the type of car you choose can affect the amount of tax you will have to pay.
The following is a brief guide to taxes on leased cars, but it’s generally advised that if you're serious about leasing a car you should consult with your accountant or financial advisor before committing to anything.
Company cars are usually taxed as a benefit in kind which is a perk of the job that's not included in your salary and is therefore liable to taxation.
If you're on a low income (£8,500 a year or less) then you won’t have to pay tax on the vehicle. However, if you're a director of the company you will be taxed regardless of how much you earn.
Individual employees will be taxed at their top rate of tax and how much they are liable to pay depends on many factors including the value of the car, what fuel it takes and its CO2 emissions.
As a business owner, the cost of leasing a car can be deducted from taxable profits, as long as the car has CO2 emissions below 130g/km. Only 85 percent of the cost can be deducted if the car has a higher CO2 emission, so choosing a car that's environmentally friendly can have a real impact on what you can claim back.
Unless the car is wholly being used for business purposes, only 50 percent of the VAT can be claimed back.
This is because if the car is being used for personal purposes then the user is liable to paying value added tax, regardless of how much time they spend using it for business purposes.
If you're a sole trader, then you can simply claim motoring expenses on your self assessment form as long as you keep detailed records of your usage.
If you lease your car for personal use only then you'll be liable for paying VAT on the monthly cost at the point of sale.
All personal quotes on LeaseYourNextCar include VAT in the monthly price for your convenience.
If you use your car for business usage and have a personal lease then you may be able to claim milage from your company. You can claim 40p per mile for the first 10,000 miles and then 20p per mile after that. Check with your company to see what their procedures are for claiming business milage.
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