▶ Designed for business car lease deals
▶ Also available on van lease deals
▶ Easy eligibility
▶ Tax and VAT benefits
Being self-employed or a sole trader can involve a lot of driving.
Which is where self-employed business leasing comes in (officially known as Business Contract Hire).
In this comprehensive guide, we'll cover how it works, how it benefits you, and what requirements you'll need to fulfil (trust us, it's not a lot!).
Do I Qualify for a Business Lease Deal as a Sole Trader?
Yes. You'll need to be at least 18 years old and be classed as self-employed or a sole trader.
You are self-employed or a sole trader if you:
- Work for yourself
- Own a business
- Agree prices for your work
- Work for multiple clients
What's the Process?
1) Choose the vehicle that takes your fancy
2) Adjust the deal for your preferred mileage, initial rental and contract length
3) Click the Phone icon or the ‘Get my quote’ button
4) Apply for finance with our leasing partners
5) Sign your lease agreement
6) Await delivery and enjoy
What Documents Do I Need for a Business Lease?
- Personal details (name, address, date of birth, property status)
- Proof of ID
- Business information
- Business bank account info
It's relatively uncommon, but certain funders might also ask you to provide bank statements (usually 3 months’ worth).
Similar to a personal car lease, you will also undergo a quick credit check in order to be approved by the finance company who provides the funding for the deal, as they need to be assured that you will be able to make the monthly payments.
Due to the above, it can sometimes be helpful for your business to have at least some financial history, though it's not the end of the world if yours doesn't. You may just be asked for further information.
What Income Do I Need?
There's no set number here, because it more or less depends on what vehicle you're leasing and on what terms, so perhaps the correct answer would be - enough to allow you to keep up with the monthly payments.
As such, the finance company will likely need assurance that your company account contains the funds needed to cover the cost of the lease, which is also why the credit check is important.
If you're struggling in terms of budget, there are a few things you could do such as opt for a cheaper business lease or lower the mileage on the lease contract, thereby reducing the price.
Benefits of Self-Employed Car Leasing
-
Fixed monthly payments
-
No depreciation worries
-
Claim back tax and VAT (more on this below)
-
Cheaper vs PCP*
-
Road tax (Vehicle Excise Duty) included
-
Full manufacturer's warranty included
-
Breakdown cover
-
The lease costs will be ‘off balance-sheet’
*See our disclaimer on how we calculate our leasing vs PCP rates
Tax and VAT Benefits
Here's the really good bit . . .
As a sole trader or self-employed person, you can claim back 100% of the VAT if you use the vehicle for business purposes only, or 50% of the VAT if you use the vehicle for both business and personal use.
You can also claim the monthly payments and the initial rental cost as a tax deductible-expense in your tax return, meaning that the complete amount can be written off against your tax bill.
Do I Pay Company Car Tax If I'm Self-Employed?
Great news, you don't.
You will be exempt from paying company car tax as there is legally no difference between you and your company.
Generally speaking, you only need to pay company car tax if you’re an employee working for a company which has a business vehicle that is used on the job or for personal journeys.
Exemptions from company car tax include:
- Partner of a business
- Owner of a business
- Member of Limited Liability Partnership (LLP)
Can I Claim Back Any Mileage?
Yes, you can claim back mileage, though the process is a bit different from claiming mileage on a personal lease.
For business leases or company cars, mileage is reimbursed through a Fuel or Mileage Allowance. This involves calculating vehicle expenses based on a flat rate set by HMRC.
This is known as Simplified Expenses, with a fixed amount based on the number of miles driven.
Can I Use the Car for Personal Journeys?
Sure can.
But if you use the vehicle for both business and personal use, you'll only be able to reclaim 50% of the VAT. And that's true on any business lease, not just if you're self-employed or a sole trader.
Still definitely better than not being able to claim back any of the VAT, as is true with a personal car lease.
Can I Add My Own Signs to the Lease Vehicle?
We get it. You want to advertise your business, and signs are a great way of doing that.
Well the good news is that a lot of leasing companies do permit you to add signs, branding and logos. However, you must still get their permission before doing so as there may be certain restrictions on modifying the vehicle.
Do note as well that due to car lease fair wear and tear regulations, any signs and logos will need to be removed from the vehicle by the end of the lease, and without causing excess damage.
Summary
That about wraps it up.
Taking out a business lease if you're self-employed is not only possible but hugely beneficial in terms of your finances, tax and, well, just about everything.
So if you're ready to reap those benefits, get yourself a self-employed car lease by heading on over to our business car lease deals and van lease deals now.
FAQs About Self-Employed Car Leasing
Is it worth leasing a car if self-employed?
Leasing a car as a sole trader or if you're self-employed can be worth it due to the VAT benefits (you can claim 100% of the VAT back if you use the vehicle for business purposes only, or 50% if you also use it for personal journeys), and due to being able to write off the payments as a business expense in your tax returns.
The fact that you get road tax and the full manufacturer’s warranty included works in your favour as well.
Can you lease a car if you own a business?
Yes, you can lease a car and qualify for a business car lease if you own a business, work for yourself or are a sole trader. Your trading history isn't hugely important to funders, but you will need to provide some basic documentation and pass a credit check in order to be accepted.