Leasing cars

[lewis_webb]

Hi, im after two new cars probably M3 and a discovery 3 TDV6. I’ve always brought cars outright however I have been told that there is tax benefits if you lease cars/equipment. Has anybody got any advice on leasing the two cars above. The discovery would do low mileage about 8k per year but i guess the bmw will do about 20k per year (know I should get a 330d but I love the m3). I think it would probably be over 36 months.

Thanks

[sb-1]

Lewis,

Your best bet is to speak to your accountant,he should be able to work out the pros & cons for contract hire against outright ownership.

[stesrg]

Naa my accountant said you will pay tax weather you lease or not however the best bet is to finance it through your company over say 3 years this will depreciate vastly however you can sell it back to your self at its lowest, this lowest price will fetch a lot more when you evidently sell it on ie more than bottom book hence you will make a small proffit, A lot of companies are going the commercial way now(will however finish in 2007) as to claim the vat back eg you can buy a 4x4 turn it into a commercial usualy costs around £500.00 to do the conversion this will go on the sales recipt as vat deductable, you can then convert it back to std, its worth looking into. look at mine
Ste...

[Eric Mc]

The tax benefits and claims allowable under the various types of finance arrangements have been very much evened out in the last ten years or so.

Despite this, the correct treatment in both accounts and tax computations varies hugely depending on whether you:

i) buy the car outright for cash/cheque/direct payment

ii) buy the car outright but finance it using a straight bank loan

iii) acquire the car using a Hire Purchase aggreement

iv) acquire the car on a fianace lease (lease purchase/contract hire etc)

v) acquire the car on an operational lease ( a straight rental basis)

The actual mechanics of making sure the tax and accounting regulations are properly adhered to are quite technical and I have seen lots of examples of accountants who have got it wrong - i.e failed to interpret the small print of the agreement properly.

There is no simple answer to your question though. My advise to clients is always get the best deal you can and then worry about the tax implications.

Do you run your own business?
If so, are you a sole trader or do you run the business through limited company?

>> Edited by Eric Mc on Thursday 1st September 17:54