Leasing a Car Personally vs Through Your Limited Company?
If you’re a UK director, this is the car question: Should I put it through the company or keep it personal? Should I lease the car personally or through company?
Short answer: it depends on usage, emissions, and the total cost after tax. Here’s the no-jargon version.
The 60-Second Answer
-
Mostly personal use? Lease personally and claim 45p/25p per mile for business travel. Simple, often cheapest overall.
-
High business use or low-emission/EV? A company lease/HP can work well (low benefit-in-kind, some VAT recovery, corporation tax relief).
-
Vans/pickups for work? Company vehicle often wins (flat, simpler benefit rules; zero-emission vans can be 0% benefit).
How Company Car Tax (BiK) Works (Plain English)
If the company provides a car that you can use privately (including commuting), you’ll be taxed on a Benefit in Kind (BiK).
BiK = List price (P11D) × BiK % (BiK % is largely driven by CO₂ and fuel type).
-
Lower CO₂ = lower BiK; electric cars are favoured.
-
The company also pays Class 1A NIC on the same benefit.
Rule of thumb: EVs and very low-emission cars keep both your personal tax and the company’s NIC down.
Finance Choices & What Changes for Tax
-
Personal lease + mileage: You lease in your name. Claim 45p/mile for the first 10,000 business miles (then 25p). No BiK, no employer Class 1A NIC.
-
Company lease (contract hire): Rentals are tax-deductible. If CO₂ > 50 g/km, 15% of rentals are disallowed for tax; ≤50 g/km has no disallowance.
-
Company HP/loan (own the car): Relief follows capital allowances (emissions matter).
-
VAT on company leases: With any private use, typically 50% of VAT on the finance element is reclaimable; maintenance can usually be 100%.
Fuel & Mileage You Can Claim
-
Using your own car: claim 45p/25p (cars), 24p (motorcycles), 20p (bicycles) per business mile—tax-free to you, deductible for the company.
-
Company car fuel: use HMRC Advisory Fuel Rates (and Advisory Electric Rate for EVs). Think carefully before letting the company pay all private fuel—the fuel benefit charge often outweighs the perk.
Vans & Pickups (Often Simpler)
Company vans use a flat benefit if there’s private use (no CO₂ bands).
Zero-emission vans can be 0% benefit. For many trade or equipment-heavy roles, this route is both practical and efficient.
Quick Scenarios (So You Can See It)
1) Sporty petrol SUV, ~7,000 business miles/year
Private use dominates and CO₂ is high → Personal lease + mileage is usually cheaper and cleaner than taking a chunky BiK.
2) Consultant doing ~18,000 business miles in a plug-in hybrid or EV
Low CO₂ + high business use → Company lease/HP is often best: low BiK, partial VAT recovery, solid corporation tax relief.
3) Small team needing a workhorse van
A company van is typically the winner; if it’s zero-emission, the benefit can be £0.
Simple Chooser (Print-Friendly)
-
Usage: Mostly personal → Personal + mileage. Mostly business → consider Company.
-
Emissions: ≤50 g/km or EV → company route improves. High CO₂ → personal route usually wins.
-
Admin appetite: Hate admin → Personal + mileage. OK to payroll a benefit and keep logs → Company is fine.
FAQs (One-Liners)
Can the company reclaim all VAT on a leased car?
Not usually. Expect a 50% block on VAT for the finance element if there’s any private use; maintenance can usually be 100% recoverable.
Is company-paid private fuel worth it?
Often no—fuel benefit can cost more than it saves. Use advisory rates and reimburse private miles instead.
Do I need logs?
Yes. Keep a simple mileage log (date, from–to, purpose, miles). It protects you whichever route you choose.
Bottom Line
-
Personal lease + mileage is best when private use dominates or you want minimal admin.
-
Company lease/HP shines for EVs/very low CO₂ and higher business use (lower BiK, VAT recovery on lease, corporation tax relief).
-
Vans are usually a straightforward win, especially zero-emission.
For more information on another tax saving strategies. Read the blog about the salary and dividends for 2025-2026