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Should I Choose Personal or Business Contract Hire?

By Vehicle Contracts
10-07-2020
If you’re self-employed or work for a limited company that requires you to travel longer distances than most, having a reliable, professional car is essential.


Whichever way you look at the subject, a car is an investment. So making sure that you’re driving a car that is economical and isn’t at risk of falling apart is ideal if you want to keep the costs to your business or your wallet to a minimum.  

Leasing allows you to get a car that suits all of your needs without having to make the big upfront investment associated with buying one. Contract hire is essentially the same as a long-term rental of a car, you take out a lease agreement with a monthly fee, so you don’t have to worry about how much the car’s value depreciates over time and you get a brand new car to go along with it.  

However, with so many options available on the market and the number of factors that decide how much car tax you pay, it can be confusing to know if taking out a person or business lease is the right option for you. 

What’s the difference between personal and business car leasing?

When it comes to car leasing, there are two types available:

  • Business leasing: This is can only be done through a limited company, and is often the cheaper option. 
  • Personal leasing: This is when you take out a lease on a car and it is not attached to any limited company.



However, while the reasons stated above are the main difference between a business and personal lease, you should take the following into consideration: 

  • If you take out a business lease on a car you still have to pay company car tax, however, this is often cheaper than personal car tax.
  • If you’re on a personal lease contract, you get a chance to get a brand new car at the end of your lease contract - letting you drive the latest and greatest in motoring.
  • A business contract hire is usually cheaper than a personal one as you can claim back 50% of the VAT on monthly payments, and all of the VAT back with any maintenance carried out.
  • If you have a personal car lease, your road tax is included.





What is company car tax

If you take out a business lease on a car, you have to pay company car tax. This is an additional tax that you pay on top of your road tax.

Company car tax is worked out by calculated based on the following: 

  • The co2 emissions produced from the car 
  • The value of the car, plus the value of any additions made and the cost of delivery (this is otherwise known as the P11D value)
  • Your personal tax bracket



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

If you are self-employed and work in a profession that can make you considered to be a sole trader, you could qualify for a business lease through your company.

If you’re looking to take out a personal or business but need help getting the best deal for you, speak to a member of our team. Our experts will help you understand the world of business and personal car leasing to help find the best car for you at an unbeatable price.

Best cars for business contract hire

Your needs for choosing which car to take a business lease on will entirely depend on your line of work. If you’re travelling between clients or appointments you may need something that is efficient and reliable, or you may be looking for something that better suits an executive look that leaves a good impression.

Mercedes C Class Saloon

The Mercedes badge carries a certain prestige that is instantly recognisable by anyone who sees it. The Mercedes C Class Saloon takes luxury, comfort and style to a whole new level. It’s commanding silhouette, defined curves and big wheel arches leave a lasting impression that is a must-have for an executive vehicle.

Best Cars for Personal Contract Hire

Whether you’re after a long-term lease for a new family car, or you fancy driving around a high-performing sports car, here are some of our top picks for personal car leasing.

BMW 2 Series Coupe personal contract hire

One thing that you can guarantee when you drive a BMW, you’re driving a car that has been built to give you the ultimate driving experience. The BMW 2 Series Coupe is no exception.

It’s M240i boasts a 340bhp twin-turbocharged petrol engine that produces heartstopping amounts of power that help the car achieve speeds of 0-62mph in 3.4 seconds. It’s sports steering and dynamic rear-wheel drive gives the BMW 2 Series Coupe racetrack precision handling.

Kia Sorento personal contract hire

The Kia Sorento is a 7-seater SUV that is one of the most versatile cars on the market. It’s spaciousness, comfort and reliability make it ideal for busy families who constantly find themselves on-the-go.

Kia is renowned for producing efficient cars that are cheap to run. The Sorento’s 2.2 litre engine has low fuel consumption and low emissions for a diesel. Meaning that the car will have a lower road tax than most other SUVs.

Nissan Leaf personal contract hire

Fully electric vehicles are growing in popularity, and with each generation they are improving in battery technology that beat the range of most petrol or diesel cars. The Nissan Leaf is one of the oldest commercially available electric car models in the world.

Fully electric cars cost a fraction of petrol and diesel to run, and costs nothing with road tax. The Nissan Leaf can reach distances of up to 168 miles on a single charge and only costs approximately £300 per year to power.



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