Nationwide Vehicle Contracts looks into the best lease cars for small business owners.
If you run a small business, you’re likely to be busy almost all the time. Whether you run a shop, a trade, or an online business, having a reliable and trustworthy car is central to your business’s success.
Your car might help you transport goods, get you to and from client meetings, or be a company car for one of your most respected employees. They also provide a range of tax benefits which reduces overheads and helps to maintain a steady cash flow.
In this blog, car leasing experts Nationwide Vehicle Contracts explore the five best cars for small business owners and the benefits of having a car for your business.
Top Cars for Small Business Owners in the UK
1. Volkswagen ID.3
The Volkswagen ID.3 is a five-door electric hatchback that appeals to small businesses that want a practical and versatile car.
Under the bonnet, you can choose between three battery packs, ranging from 45kWh to 77kWh. They come with a generous real-world range of 217-336 miles and charging capabilities of up to 100kW.
If your business requires you to transport stock, the ID.3 comes with a 385-litre boot which can be extended to 1,267 litres with the rear seats split 60/40. Space in the cabin is big enough to accommodate five adults, and all the equipment is well-built.
Volkswagen provides a three-year/60,000-mile warranty. You shouldn’t be spending too much time in the garage anyway, but if you do, it shouldn’t set you back too much, with Volkswagen parts being common.
2. Skoda Superb
If you’re looking for a practical and reliable car for your small business, look no further than the Skoda Superb. It has loads of cabin space, a massive boot, and a range of reliable and economical engines.
The main selling point of the Superb is its ridiculous practicality; there’s loads of room throughout the car, and it has a massive 625-litre boot which is great for moving stock. For bulkier items, you can split the rear seats 60/40, which increases cargo space to 1,760 litres.
On the inside, the Superb has been built to military standards, feeling like it could survive a nuclear bomb. This is mirrored under the bonnet, where you get a choice of a petrol, diesel, or plug-in hybrid engine. They all return excellent fuel economy, with the diesel averaging around 60mpg and the plug-in iV around 242.2mpg.
3. Ford Ranger
The Ford Ranger is more of a pick-up truck than a car, but it’s perfect for small businesses transporting heavy goods and dealing with rough terrains. Available with either two, four or five seats, the Ranger is both reliable and practical.
Although specific payload varies depending on the cab and engine type, most Rangers can carry more than a tonne and tow up to 3,500kg. If you need to carry longer and heavier items, the Regular Cab would be a wise decision, whereas if you need more passenger room, go for the Super or Double Cab.
Under the bonnet, you get a 2.0-litre four-cylinder diesel engine with power outputs ranging from 130 to 213bhp. On-the-road ride quality is decent, and a sophisticated suspension makes off-roading a breeze.
4. Tesla Model 3
The Tesla Model 3 appeals to small businesses that want a blend of style and performance. A fully electric coupe, the Model 3 comes with a sporty exterior, excellent range, and a powerful set of engines.
On the road, the Model 3 is one of the best electric cars on the market. Under the bonnet, batteries range from 52kWh to 82kWh, with power outputs also ranging from 245bhp to 456bhp. The Model 3 range is excellent, varying from 305 to 374 miles.
The Model 3’s slick exterior style is matched on the inside with a Tesla’s massive 15-inch touchscreen infotainment system, which can control pretty much everything in the cabin.
Although the Model 3 might not be as practical as others on this list, it will undoubtedly make a good impression on your clients.
Financing your lease car
You can choose from a couple of options if you want a car for your small business. You can either buy the car outright or lease it. If you decide to lease, there are four contract types available to small businesses:
Business Contract Hire – Business Contract Hire is a long-term lease hire agreement suitable for sole traders, partnerships, and limited companies who don’t want to own the vehicle. You’ll pay a fixed monthly payment on the car and then return it to the finance provider at the end of your contract.
Business Contract Purchase – Business Contract Purchase is for companies who want to own the vehicle at the end of their contract term. You’ll pay an initial deposit and fixed monthly rentals, and then at the end of the contract, the company can buy the vehicle at an agreed price.
Finance lease – Finance lease is more suited to those who want a fleet of vehicles. You can either pay the entire cost of the vehicle, including interest charges, over an agreed contract term. Or, you can pay lower monthly rentals with a final payment based on the estimated resale value of the vehicle.
Business lease purchase – Business Lease Purchase is an agreement designed to offer dedicated vehicle funding if your company eventually wishes to buy the vehicle but doesn’t want to spend the money upfront. You’ll pay an initial deposit and a series of monthly payments until the end of the agreed contract length and then pay the estimated residual value of the vehicle to own the car.
Tax implications
Apart from getting behind the wheel of a new car hassle-free, there are numerous tax benefits when having a car for business use.
VAT reclaimable – If you’re a VAT-registered business, you can claim back up to 100% of the VAT on your monthly lease payments. If the car is driven for personal and business use, you can reclaim up to 50% of the VAT.
If you take out a maintenance contract, VAT-registered businesses can reclaim 100% of the VAT back.
Payments are tax deductible – If your business lease car emits less than 110g/km, it’s entirely tax deductible. However, if your car emits more than 111g/km, the amount you can offset decreases to 85%. If you lease a van, you can claim 100% of your tax regardless of emissions.
Conclusion
Getting a car for your small business is great, but it undoubtedly raises questions about what car to choose and what lease contract to go for.
Depending on the needs of your small business, there’s an excellent range of affordable, reliable, and practical cars on the market. As always, don’t rush the selection process, as a business lease is a long-term agreement, so you must ensure you have the car best suited to your small business.
You also have a great range of flexibility regarding your contract choice, all of which bring their own pros and cons. When choosing a contract, you’ll need to consider how your business will look in the next few years and establish the short-term needs of your business lease car.
Do you need a car for your small business? Nationwide Vehicle Contracts is one of the UK’s largest car leasing brokers and has a range of leasing deals available to suit your every need.
We also produce regular blogs on various topics, such as The Tax Benefits of Car Leasing for Businesses and How to Save Money on Car Maintenance.
