Private lease or business lease – which is right for your business?

Published on 01/09/2016

Business or personal leaseDeciding on the type of vehicle acquisition that best suits your business needs can seem like a difficult decision. In the current economic climate, there’s a lot to consider financially before considering environmental factors that can also play a large part in decision making for businesses looking to acquire a vehicle or fleet.

It’s not hard to see why careful consideration is given to leasing options given that acquiring vehicles is often one of the larger expenses for businesses alongside purchasing or renting a building. At Neva, we speak to many customers who are unsure of the differences between leasing types and the benefits of each to their business model so, because we like to think we’re helpful types, we’ve put together some pointers on how to decide which option best suits your company usage and requirements.

Let’s talk finance

Recent reports suggest that many employee drivers are now opting for a cash allowance while using personal vehicles to get around government tax policy.  HMRC data shows 950,000 employees paid company car tax in 2014/15 – a 1% increase on the year prior and the first growth seen since 2006/7.

The British Rental and Leasing Association (BVRLA) noted that there was a steady rise in employees taking up cash allowance, so what does this mean for acquiring business vehicles cost effectively?

Personal leasing from cash allowance has its benefits, one of which is the business time saved from offering employees the opportunity to acquire their own vehicle. Directors and HR managers often spend valuable time searching for vehicles suitable for purpose and appropriate for employees, when much of the decision making process could be done by the person driving the vehicle, saving hours of work from other employees.

Taking out a business lease undoubtedly has its benefits – one of the foremost being that vehicle running costs can be logged as business expenses.  Of course, if you are a business owner, it’s worth considering the tax and National Insurance you’ll pay further down the line on a business lease versus a private one. Personal usage also has to be factored in if the vehicle will be used privately in addition to work purposes. It’s also worth taking into consideration your business mileage in this instance. Business leases require employees using vehicles for personal use to contribute to government tax policy, so often a personal lease may be a more attractive prospect for them if offered a cash allowance.

Operating responsibly

Of course, government tax policy is only part of the debate when it comes to private vs company leasing. It is important now more users are on the road for businesses to ensure they’re operating responsibly and demonstrate a social conscience. It isn’t looked upon favourably or deemed responsible for businesses reliant on regular car usage to be contributing unnecessarily to external environmental factors.

As cars age, they become less efficient and can end up being less environmentally friendly when compared to newer makes and models. This is why buying a vehicle for company usage, whether acquired privately or through business, is not only a risk in terms of safety and fuel economy, but also in terms of impact on the environment. Both personal and business leasing offers can assist with choosing more environmentally friendly makes and models that can be updated at the end of a lease when newer technologies are released.

It has been noted recently that individuals opting for cash allowance for a personal lease are often responsible for higher CO2 emissions than those on a business lease. Businesses have a responsibility to ensure CO2 emissions are reduced where possible, whereas individuals may overlook this criterion in favour of other features. Considering this before providing cash allowance to employees is advisable.

Service

At Neva, we have teams dedicated to helping all of our customers, whether you want assistance with choosing a personal lease or you have business budget to allocate to leasing a fleet. All of our leasing options offer the same benefits in terms of vehicle choices and we can recommend vehicles without bias, as we stock many major brands and models, meaning employees get cars suitable for their job needs and usage.

 In addition to this, both personal and business leasing offerings give employers the opportunity to ensure cars are safe, fit for purpose and energy efficient, especially when taken out with an added full maintenance package, which ensures repairs and maintenance are covered and costs fixed in advance.

Our Neva direct team can help with private leasing queries and our team of account managers are on hand to offer advice and support for fleet managers taking out business leasing. At Neva, we’ve also developed our award winning C Fleet app to make business leasing and fleet management a whole lot easier.

Your business needs are individual, so come and talk to us

While it’s possible to outline some of the pros of each type of leasing option, it’s often worth giving considerable thought to personal circumstances or business models in order to ensure the right vehicle procurement choice is made. Good advice might seem hard to come by but, at Neva, we know it’s one of the most important parts of the process.

Of course, you can always take a look at our website to browse deals, but we think there’s nothing that can compete with a good old fashioned conversation with someone who really knows their stuff. That’s why we employ a friendly expert team who can talk to you about your individual needs and advise accordingly.

We have experts in each sector who offer unbiased solid advice, whether you’re budget conscious or time poor. We don’t just help with choosing makes and models either; our Neva team offer an end to end service to take the hassle out of leasing so, whether you opt for a business lease or a private leasing option, we can talk you through finance without the jargon or the fuss. Want to talk options? Call a Neva specialist today to find out more!