Should I Buy a Car Through my Business?

If you’re in the market for a new car, then you’ll have a range of different buying options to consider. You might look into the used market, or buy something fresh off the factory floor. You might dip into your savings and buy the vehicle outright, or you might lean into one of the many forms of finance available. 

Those of us who do a lot of driving for a living, and who own our own businesses, have the option of buying the car as a business asset. Doing so presents a few technical hurdles – but they’re more than justified by the amount of money you stand to save.

So, what might you consider before heading down this route? A few factors stand out as worth thinking about.

Usage

In practice, it’s very rare that a vehicle is entirely used for business and never for personal trips. This is consequential because of the VAT that you’ll be able to claim back. You can only do this if the car has never had any private use, and you aren’t going to use it privately yourself. Bear in mind that private use here includes your commute back and forth to work. 

Motor Expenses

While you might not be able to claim VAT back, there are still savings to be made. You can recover the money you spend on things like fuel and repairs, as these are considered investments into the maintenance of a business asset. 

Your personal use will also eat into the amount you’re allowed to claim in capital allowances.

Brand Image

Your business’s vehicles will need to reflect the business’s brand and values. This might mean a van with your logo and contact details emblazoned across the side, or it might mean a professional-looking (and probably black) estate. If you’re looking at the used market, you might be able to pick up a bargain while keeping your fleet fairly consistent.

Capital Allowance

The vehicles you buy for your business are considered fix assets, in the same way as plant and machinery. With that said, they work a little differently to other kinds of assets when it comes to the capital allowance. 

The amount you claim will depend largely on the vehicle’s CO₂ emissions. Bear in mind also that you might have extra liabilities to consider when you sell a vehicle that you’ve bought while claiming capital allowances.