The advantages of leasing a car through your company

Owning and running a car can be expensive, but there are some ways that you can reduce the cost, especially if you opt to have a company car instead of a personal vehicle. At The Exeter Daily we love saving money as much as you do, and leasing a car through your company can provide you with a number of tax breaks, which more and more savvy business people are taking advantage of.

Eligible Deductions

There are two ways of calculating the costs of running a vehicle. Many companies choose to pay expenses on a per-mile basis, with the current allowable rate being 45p per mile. This is the simplest way of calculating the cost of running the vehicle, since it does not require the driver to track every single small expense, and is priced at a level that would cover wear and tear, fuel expenses, etc. Incidental expenses such as the cost of parking during a business trip are permissible expenses that can be claimed in addition to the business rate.

Deduction Exceptions

Motorists who hire vehicles can deduct the expense for tax purposes, as long as the cost incurred is necessary and the vehicle was hired wholly and exclusively for business purposes. Car rental companies online, for example Intelligent Car Leasing, can make this easy. The main pitfall for business owners here is that often the vehicle is used on weekends, or in the evenings, for personal use. This means that the whole cost cannot be expensed. It is still permissible to deduct a portion of the cost of the hire, however, based on the percentage of time that the vehicle is being used for business purposes.

While the cost of parking can be claimed, the cost of a parking fine cannot be, since the fine is classed as an infraction of the law.

Tracking Eligible Tax Deductions

There are several options for tracking mileage and expenses. Many people still use a handwritten logbook or a spreadsheet. This can be effective for small companies, but with bigger businesses there is the risk that drivers will inflate their business mileage, even going so far as to add fictitious journeys. There are online services that will track mileage based on postcodes and odometer readings. These reduce the risk of fraud and also reduce the administrative burden. There are also some even more high-tech services that use GPS tracking to determine where the vehicles are going, to reduce the margin of error even further.

Business and Personal Travel

Using a rental vehicle for personal travel can save you a lot of money and give you access to a vehicle that is more modern than what you may otherwise purchase for yourself. On the surface, it may be frustrating to learn that you cannot claim for mileage for personal journeys, however you still enjoy the rental of a new vehicle, and the burden of maintenance is covered by the company. This makes leasing a car through your company a great deal compared to using a private vehicle for business travel.