Business car leasing for the self-employed

More and more people are choosing to be self-employed, deciding to work as freelancers or starting their own small businesses. With the rise of start-ups and the popularity of the ‘gig economy’ (freelancing and temporary work), this increase is no surprise.

Car leasing for the self-employed

Of course, if you’re self-employed, it’s possible that you will be in need of a car and you might be wondering whether it will be possible for you to lease a car via a business lease, rather than getting a personal lease.

In this article, we look at business car leasing for the self-employed. We will also be looking at what business options are available to you; what the criteria are and the business benefits of leasing.

Can you get a business car lease if you’re self-employed?

If you’re self-employed can you qualify for a business lease? There are several types of person who can qualify for a leasing a car through a business

If you are any of the following you may qualify for business lease:

  • A sole trader
  • Have a limited company
  • A partnership
  • A VAT-registered business
  • An LLP (limited liability partnership)
  • A PLC
  • A charity
  • Local authority
  • Central government
  • An embassy

Essentially, if you are self-employed, you can get a business car lease as you are considered a sole trader. However, there are other criteria that you must achieve before you can lease a car.

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Will you qualify for business leasing if you’re self-employed?

To qualify for business leasing you will have to go through a process similar to the one you would if you were applying as a private individual.

When applying for your business lease you will be asked to provide your latest set of accounts. These will hopefully show you have a positive net worth! Sometimes Finance Houses will ask to see your latest bank statements as well as proof of address and ID. You will also have to go through a credit check.

If all of this checks out, then there is no reason why you should not be able to get a business lease.

Car leasing for the self-employed

What business lease options are there?

If you’re looking at car leasing for the self-employed and applying for a business lease there are several options for you to choose from. These options are:

  • Business Contract Hire
  • Finance Lease
  • Operating Lease

Business Contract Hire

Business Contract Hire is one of the most popular forms of leasing and is what people are often talking about when they refer to leasing.

Business Contract Hire involves paying a fixed monthly fee for a period of time, sticking to pre-agreed mileage and condition restrictions. Once that time is up, you hand the car back with nothing more to pay (subject to mileage and conditions).

Finance Lease

Finance Lease is a great option for businesses. There are no mileage restrictions or condition restrictions on this scheme.

A Finance Lease works in the same way as Business Contract Hire. You will pay a monthly fixed fee for a set period of time. However, once that time comes to an end you have two options as to what you can do with the leased vehicle.

  1. You find a buyer for your vehicle and introduce them to the Finance House. The buyer will pay the Finance House, who will use that money to pay off the remaining balloon payment. If you sell the vehicle for more than the balloon payment, you get the equity. If you sell it for less, however, you will have to make up the remaining balance. It should be noted that the lease company may charge a small fee for processing this. This is usually between 0.5% and 2.5%.
  2. You can pay a small fee, usually one monthly payment, and keep the vehicle for another year (this is often called a Peppercorn Rental). Of course, at some point, you will have to make the final balloon payment.

Operating Lease

A Business Operating Lease works in the same way as Business Contract Hire. However, the only difference is that Vehicle Excise Duty is only included for the first year. Operating Leases are not as common any longer, with them primarily being offered by Mercedes.

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What are the business benefits of leasing?

There are plenty of benefits to leasing through your business if you’re self-employed or otherwise, which is why it’s so popular. For example:

  • If your business is VAT-registered then you can offset 50% of the VAT on a car
    • If you have a van you can offset 100% of the VAT
  • Finance commitments can be “off balance-sheet” for vehicles on Contract Hire or Operating Lease
  • If you get your car on a Finance Lease, the financial commitments are “on balance-sheet”
  • Your money won’t be tied up in a depreciating asset
  • Monthly payments are fixed which makes for easy budgeting
  • Vehicle Excise Duty is usually included
  • On occasion, business leasing can be cheaper than personal leasing
    • We’ll go into more detail about that below.
Car leasing for the self-employed

Do you have to pay Company Car Tax if you’re self-employed?

So, is it better to lease through your business or as a private individual? There are many options when it comes to car leasing for the self-employed.

Most of the time we recommend that if you can go through your business then you should. This is because of the benefits that go alongside a business lease.

When you lease through a business you often have access to greater fleet discounts, meaning that it can cost less to lease through your business.

If you are self-employed then you are also exempt from paying Company Car Tax, and this can certainly make business leasing more appealing if you’re a sole trader.

However, there are some occasions when it will be better for someone to get a personal lease; when this is the case we will recommend you go down that route. If you are unable to provide the information the Finance House needs about your company, you don’t have the latest set of accounts that show your business has a positive net worth, or the vehicle you are looking at has a high CO2 rating and/or P11d value, then you may have to take out a personal finance solution for your vehicle.

Self employed leasing - tax benefits

If you do lease privately, it will still be necessary to go through the credit check process to ensure that you can make the monthly payments. If you have a bad credit score then don’t be disheartened, there are options available to you.

In conclusion, you can lease a car if you are self-employed, but you will have to go through the same processes as other businesses and private individuals. There are a lot of advantages to leasing through your business including tax benefits and the fact that you could end up getting a better deal than if you went privately.

However, it isn’t for everyone, and you may find it easier or better for your situation if you lease privately. Ultimately, though, it’s down to which option is best for your individual situation.


Interested in finding out more about car leasing for the self-employed? Request a callback and one of our specialists will guide you on your best option to suit your situation. We can then find you the perfect vehicle for your work at a budget that suits your finances.

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