in boxed you...in terms of deals often when a vehicle is about to get a face lift, the previous versions are cheaper

Watch the BiK on the Mercedes. I assume self employed still have to pay it? I found the monthly BiK on the C-Class came out quite expensive over other similar cars during my search for a company car. About £20 month more I seem to remember.

C-Class was very nice and had some great deals. Didn't like the auto box though, it takes a while to consider things if you want to accelerate with gusto.

PH... sorry for mentioning BiK in probably half of my very few posts! Will try harder in future...

Well I was assuming it would have to be done as a personal lease because I would be a sole trader (so it would not strictly be a company car and the lease companies would be looking at my personal history and not that of the company). How does this BiK thing work in this instance? My accountant led me to believe that the lease value could be written off my pretax profits and then a percentage according to business/personal use of all other costs likewise (which will be most since I have a second car which is not suitable for business use)...

From a quick search I interpret that BiK means that whilst the taxman does not tax the lease... he will tax the benefit in kind instead... which is actually more than the lease amount... that being the case, I don't see the point in leasing it within the business...

I’m going to make a massive leap of logic here and assume that by going self employed and wanting a Merc Estate then you’re going to be some sort of consultant/contractor in an office environment.
Otherwise you’d be leasing a transit van.

To cut a long story short.
It’s not worth trying to blag the car through the company.

I guess it might be if you are driving to lots of different client sites every day and can prove business mileage and that the car is a necessary tool sort of thing.
But if you’re just using it to drive to the same place for 3 months then you’ll be nailed on tax all over the place.

Also, at year end, the hassle of working out the tax on the car payments will just annoy you as you try and do the maths.

If it’s your first year trading I’d suggest that you just keep things simple in the company account books.

For a car, get a £10k bank loan over 5 years and buy a nice condition second hand motor.

The big snag with leasing is it's not flexible. If the business doesn't pan out, or your needs change, you're pretty well stuck with having to pay for the agreed term.

Thanks guys.

I am now a bit confused because what jm0908 says seems to contradict some of those comments made by others. If jm0908 is right then leasing is a great way of going about things... if the others are correct, it really isn't so great.

jm0908:
I was not planning on being VAT registered but I am debating that it might no be a bad idea since I have every intention to be selling to predominantly VAT registered companies. By so doing I presume then I save not only by paying the lease pretax but I don't pay much of the VAT (50% or all of it depending on the emissions)? I presume there is nothing to stop me doing just a personal lease and claiming the VAT accordingly as opposed to going for a company hire?

My business is varied and will comprise some contract work for a couple of companies which will be a regular but (hopefully) smaller element and then sales and development of products to anyone else I can find. So I will find myself commuting between the regular contracts, suppliers and also customers (with my base being home). I could get a van but I will only rarely need to carry any really large amount of stuff. At the same time, a saloon limits me to only very small amounts. An estate gives me the scope to carry several hundred kilos but is also quite reasonable for when I am only carrying a box or two. Given that I have a second car (I am a PH, after all), I don't quite understand why this would be a problem for the taxman - can you explain where I am confused if you disagree (snowboy I think...)? With regards to the tax on the payments at the end of the year... my understanding was that the payments were 100% tax deductable and it was only the use which was complex. Given that I have to keep receipts and tend to keep records of all mileage, it should not be too difficult to do the business/personal breakdown.

Oh, I do realise that these are legally binding contracts and I can confirm that I have plenty enough money in the bank to pay the whole lot off, if I was forced! I brought up the potential success of the business as a justification for going for a 2 year as opposed to a 4 year term... I wasn't meaning to imply that I thought I could worm out of it should the business not go to plan!

Oh and the final thing... I don't see too many 'mainatained' leases... the ones I do find seem to be rather expensive...

With regards to the VAT on a biz lease you pay the full amount then reclaim 50% in your quarterly return. With contract hire you either reclaim all of the VAT if you can prove it is wholly business use (very unusual as even a commute is classed as private use) or this is restricted to 50% if there is private use. Simples.

I am confident in saying in correct as this is my job - any good local business manager at a dealership will be able to explain this all to you thoroughly. But from my experience as a sole trader even if you're not VAT registered it is more economical to go the business route, as the rates are often better as well as the other advantages described above.

Have a look online for the 320d Sport Plus Touring, very cheap at the moment and comes with loads of kit. On a 3+35 10k pa its sub £300 (before VAT).

Drop me a pm if you have any questions.

Right, but I was talking about needing to terminate early if the business doesn't work out etc.

The OP says he can cover the cost anyway, so that fine, but I've seen several cases where the settlement is not far off the amount that would have been paid anyway. There's one running on an MB forum I visit where the guy thought he could hand-back and walk away half-way though as if it was HP.