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tax benefits of business leasing

Nationwide Vehicle Contracts explores the tax benefits of car leasing for businesses.

Business car leasing has many benefits; it makes you look professional, gives employees a chance to drive a company car, and offers numerous tax benefits.

By saving money on your monthly payments through massive VAT savings (for VAT registered businesses), you can free up some cash flow that could be spent elsewhere on your business.

In this blog, business car leasing experts, Nationwide Vehicle Contracts, explore the tax benefits of business car leasing.

For more information on business leasing, check out our comprehensive business leasing guides.

Vehicle rentals are VAT recoverable:

With business car leasing, VAT registered companies can claim back 100% of the VAT on their monthly payments if the vehicle is used solely for business purposes.

If you balance your car between personal and business use, you claim 50% of the VAT back. This is great for company car users who use their car all year round, not just for work.

Maintenance charges are VAT recoverable:

If you opt to take out a maintenance contract on your company car, VAT registered business can claim 100% of the VAT back. There is also the option to claim excess mileage charges as expenses. 

Payments are tax deductible:

Corporation tax can be a thorn in the side of a business from the day it starts trading. However, with business car leasing, your payments are tax-deductible up to 100%.

The specific amount you can offset varies, depending on the car you’ve leased. If you’re leasing a vehicle that has CO2 emissions over 110g/km, has uneven rentals over the term of the lease, or the lease has a clause that may allow the company to own the car, your payments won’t be fully tax-deductible.

If you lease a van, you can claim 100% of your tax back regardless of its emissions.

Who can get a business lease deal?

A couple of questions can be raised concerning business leasing, including who can qualify for one. As long as you are financially eligible and fall into one of the categories below, you may be able take out a business lease deal:

  • Self-employed/sole trader
  • Limited Company
  • Partnership
  • Charity
  • LLP

If you’re looking for more information, check out our comprehensive business leasing guides.


Have you considered business car leasing? Nationwide Vehicle Contracts offer a range of affordable business leasing deals on a range of cars and vans. 

We also produce regular car leasing blogs on various topics, such as The Impact of Privacy Concerns on Connected Car Technology and Ways to Save Money on Car Insurance While Leasing.