Practical Experience on Lease Cars

[Bagpuss]

I considered leasing a car just before I bough my current car. But I came to the conclusion that:

A/ I would lose more money in lease charges than depreciation on almost all the cars I was looking at
B/ I don't want to have the same car for 3 years (I know some are 2 years but the better deals are 3)
C/ I do more than 10,000 miles



You may think A is not true. But say you bought a 2.5 BMW Z4.
It could be picked up for 25k after discounting. After 3 years the car would still be worth at least 17k. So -8K
Over 3 years the lease would be approx £460 per month=5,520 per year.
= £16,560

How many 3 year old Z4 2.5s are on the market for 9k?

Even if you assume your 25k was in the bank, you'd gain a maximum of 4k in interest

you'd still be 4k out of pocket.


I'd only lease if the car had massive depreciation

[ratewhore]

If you're a typical contractor, it's generally best to lease privately and charge YourCo a mileage allowance. If YourCo does the leasing and lets you use the car, the personal tax hit will more than nullify the other advantages of YourCo handling the financing.

Not that I want to disagree with the Master but I had this discussion with my accountant when I leased my car. The figures I worked out for both private and company lease (bearing in mind I would have to extract more cash from the company to pay for the private lease) were within £50/mth of each other. She agreed and told me when you run your own company (as opposed to being an employee with a company car), theres not a lot in it.

I may buy it back at the end of the lease but I would have to do that personally rather than let the company buy it. Leasing rules you see!

Its worth noting I do 10000 miles pa and it's a hybrid and I appreciate everyones circumstances are different...

[Mustang]

Can I pay myself a car allowance in addition to the mileage allowance like a lot of big corporates do?

[The Master]

I can certainly see how under some circumstances it might be close enough to make no odds. As always, consult your accountant!

[DaveB]

Can I pay myself a car allowance in addition to the mileage allowance like a lot of big corporates do?

If I understand it right this can only be done as part of a formal contract of employment; which you don't want as a director as it opens you up to all sorts of tax related shenanigans.

Even if you did I'm pretty sure it would be treated as BIK and taxed as such.

[Pondlife]

Even if you did I'm pretty sure it would be treated as BIK and taxed as such.

Car allowance is taxed to the full as a BIK - It's extra salary to be used to obtain transport.

HTH

[Captain Jack]

I'd only lease if the car had massive depreciation

Of course, Bagpuss, that has to be your first calculation before you even consider the option. The motor I'm looking at, the cost of the lease over two years is less than the estimated depreciation (£6k lease cost vs £8.5k depreciation).

[Cyber Controller]

Came across this lease car site while idly surfing. If nothing else, the website is funny - check out the nuclear missile truck! You can even lease a C5!!

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