Business leasing explained

Business car leasing is a type of car leasing agreement set up specifically for businesses – it enables the director of a business to lease a car (a long-term rental of 2-4 years) for themselves and/or their employees. The main benefit being that the business can claim back up to 100% of the VAT on the monthly rental payments.

Ready to start your ZenAuto journey? Browse our range of car deals and find your perfect wheels! Or, if you need some more info on all things business leasing first, just head over to our dedicated hub.

To get a business lease with us, you need to meet the following criteria:

• Be a Director of a limited company;
• The limited company that you are a Director of has been incorporated for 3 or more years and is registered in England, Wales, or Scotland; and
• As a Director you’ll also be required to be a Guarantor to guarantee the Business Contract Hire and therefore must be a permanent resident in mainland GB

 Got a few questions? You can reach our New Car Consultants on 0113 468 5377 (option 1) or email [email protected].

It’s 100% online and you’ll get through it faster than it takes a Tesla Model Y Performance to go from 0-60mph (which is very, very fast!). In a nutshell, you order the car, go through the credit application stage, sign the agreements, complete the ID checks, and then get excited for new car day.

For the full lowdown check out our handy guide.

Ready to begin your ZenAuto journey? Browse our lease deals to find your next set of wheels! If you need help choosing the right car for you, give our New Car Consultants a call on 0113 468 5377  (option 1) or email [email protected].

With us, the process is pretty much the same for both – you follow all the same steps whether you’re a business or personal leasing customer.

Though there’s no real difference in the process, there are still four big differences:

• Eligibility requirements for each lease agreement
• The benefits each form of leasing brings
• How you can use the car e.g., for business purposes or private
• With a business lease if the driver’s not you, let us know – we’ll work directly with your employee, saving you the time and effort of having to arrange everything yourself

Yes, but you can claim up to 100% of it back in your business’ VAT Return. Each month the business will pay a monthly rental payment which will include VAT fees. Then, if you can prove that the car is only used for business purposes (this excludes commuting to and from work) the business can claim 100% of the VAT back. If it’s used for a mix of business and private journeys too, the business will only be able to claim 50% of the VAT back.

Plus, if you opt for our shiny maintenance package, as well as enjoying all the benefits of the package, your business can claim back 100% of the VAT on the monthly maintenance payments. This is regardless of whether the car is used for just business trips, or private ones too.

Interested in a business lease but want a bit of steer from the car experts? Give our New Car Consultants a call on 0113 468 5377 (option 1) or email [email protected] – they’re a friendly bunch!

Business car lease costs vary depending on the make and model of the car, and the amount of mileage. However, the typical costs include:

1. An initial payment: This is a lump sum payment that is usually required at the start of the lease.
2. Monthly rental payments: These payments are made by the business throughout the term of the lease.
3. Maintenance: These payments are optional and combined with your monthly rental to provide servicing, MOTs, and tyre repairs (due to fair wear and tear) as part of the lease agreement.
4. Excess mileage charges: If the business exceeds the agreed mileage allowance, the business will be charged for each additional mile. If you think you’re about to go over your mileage and need to increase your allowance, please contact our Support Squad and we’ll sort this for you. Give them a ring on 0113 468 5377 (option 3) or email [email protected].
5. Damage charges: If the business damages the car, they will be charged for the cost of repairs. Since we own the car, you’ll need to let us know if any damage occurs to it as we need to keep a record of it. You can do this by ringing the Support Squad on 0113 468 5377 (option 3) or emailing [email protected].
6. Fines: If the driver of the car incurs a fine, the business will be responsible for repaying the total cost.

Then there’ll be other things to consider – like setting up a fully comprehensive policy and whether you want to add GAP insurance for extra peace of mind.

Another thing to note is that although your road fund licence is included in your lease, we reserve the right to increase your monthly payments if the road fund rate for your car ever increases during your lease. We’ll let you know if this is ever the case though.

It’s the businesses’s responsibility to sort the insurance, not the leasing company – the insurance policy should be under the businesses’ s name. A fully comprehensive policy needs to be in place from the day the car is delivered, to the day it’s collected at the end of the lease agreement.

If the business is leasing more than one car it might be worth checking out fleet insurance, so you can insure all your company cars under one policy and make it easier to keep track of them. GAP insurance is also recommended to save yourself money if the car is ever damaged beyond repair. You can read all about insuring a business car over in our guide.

As an employer you need to tell HM Revenue and Customs (HMRC) if you make any company cars available for private use by directors or employees which AREN’T payrolled. When a company car is used for private use, it becomes taxable. So, you need to submit a P46(Car) form to HMRC whenever you:

• Start providing an employee with a company car
• Stop providing an employee with a company car
• Change a company car

P11D Form

If an employer gives directors and employees any benefits outside of payroll, the employer must complete a P11D form for HMRC. The amount on the form represents additional employment income and is taxable. The form provides the HMRC with details of any benefits (such as company cars that are used for private use), so that the tax and national insurance owed by the employee can be calculated.

P11D Value

The P11D value is separate to the P11D form (confusing, we know). The P11D value is used to calculate how much annual company car tax an employee needs to pay when the car is used for private trips too.

So, what actually is it?

The P11D value of a car is the list price, including VAT, any optional extras and delivery charges if applicable. It doesn’t include the car’s first registration fee or annual road tax.

Benefit in Kind

When a company car is used for private use as well as business use, HMRC class it as taxable income. This type of non-monetary benefit is called Benefit-in-Kind tax (Bik). BiK is a tax on employees who receive benefits or perks on top of their usual salary, such as company cars that are use for private trips.

Every car has a BiK percentage banding, which is based on how much CO2 the car emits, its fuel type and the emissions standard it meets. The lower the emissions, the less you’ll have to pay – electric car lease deal anyone?  

One of our team will talk to you about your indicative BiK and P11D value before you sign your agreement. However, we can’t provide the exact figures until once the car is delivered to you. If any elements of the P11D change between ordering the car and receiving delivery – such as the list price increases or decreases, or the optional extras do – this will impact your BiK calculation.