Reply to: Practical Experience on Lease Cars

[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!!

Ling's Cars

[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).

[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

[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.

[The Master]

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

[Mustang]

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

[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...

[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

[Lockhouse]

I've got a van (and it's white) that I lease through my company. Vans don't have a BIK charge if you only use them for business. It's a full service lease, so the only thing myco pays extra for is insurance. I use it for other stuff ancillary to my main contracting biz.

[threaded]

If you go for a specialist / high end car it is best to have maintenance included as such cars can be quite temperamental and if you happen to get a lemon the bills can tot up quite rapidly, whereas if they're on a maintenance contract the garage tends to have a little bit of an incentive to sort them out. Make sure the maintenance contract does actually cover everything...

It is also important to ensure the maintenance contract specifies "equivalent loan car". Can be really annoying to lease a 750 iL and find yourself driving a 316 nasty for half of each year, as it's back in the shop and takes them so long to get it working right.

Also important is the size of the "get out fee". If you get a lemon you don't want to be saddled with it for 3 years.

Also the "preferred buyer clause". If you happen to find the car is a good 'un and you want to buy it, make sure well in advance. 'Cause if it is a good 'un the lease company / garage will have it for themselves, and they'll try every scummy trick going to try it on.

Finally, as with any negotiations with car dealers, find out where they live, where their children go to school, what pets they have, and let them know you know.

HTH

[The Master]

Great thread. For those of you that do leasse, do you have private leases or do you handle it through your companies. If so, how do you handle the tax issues.....?!

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.

[Captain Jack]

Doddy, you are absolutely right about not paying the (often considerable) extra for maintenance included leases. I understand this is a big profit area for the leasing companies and reached the same conclusion. As you are leasing a brand new car what is the likelihood that it will need new pads, a new battery, etc? Virtually none unless you drive like a complete kn0bhead. All it should need is (at most) two basic services with just a change of filter and one or two other bits and bobs. Better to pay for these yourself methinks. If anything serious goes wrong in the first year you are covered by the manufacturer's warranty in any case.

[Mustang]

Great thread. For those of you that do leasse, do you have private leases or do you handle it through your companies. If so, how do you handle the tax issues.....?!

[Lockhouse]

My over mileage costs are something like £0.04 per mile which is not too bad. If it looks like you are going to go over the agreed mileage you can always renegotiate for the following year - it's only in the last year that you have to be a little careful.

[AtW]

You twat!....I wouldn't buy a car someone else had leased/owned. I was on about owning/leasing from new.................

Yes I understand you lease it, what I am saying is that since its known that drivers of leased cars totally screw them up it means that its okay by lease companies - they know it very well, so its not a factor: of course any visible damage is a no-no!