Self-employed car lease guide

Want to lease a car but not sure if you can as you’re self-employed? Here’s everything you need to know.

You’ll be happy to know that, yes, you can lease a car if you’re self-employed. Whether you’re a sole trader or run your own business, leasing can be a great option – especially if your work involves a lot of driving.

In this handy guide, we’ll cover how self-employed car leasing works, who qualifies, and the advantages of leasing.

Can I get a business car lease if I’m self-employed?

Absolutely. Self-employed individuals and sole traders are eligible for business leasing, as they fall under the accepted business categories. The most popular option for the self-employed is Business Contract Hire (BCH).

It works much like personal leasing – you pay a fixed monthly fee over an agreed term, then return the car at the end of the contract.

How do I qualify for a business lease if I’m self-employed?

To be eligible for a self-employed car lease, you need to be classed as self-employed or a sole trader. This typically includes people who:

• Run their own business
• Work independently or freelance
• Have multiple clients
• Set their own rates
• Provide their own tools or equipment for the job

What documents do I need for a business lease?

To complete your self-employed business lease application, you’ll need the following documents:

• Personal details (Name, date of birth, address, property status)
• Proof of ID
• Business information
• Business bank account information

Documents that may be required include:

• Latest trading accounts
• Three months’ worth of bank statements

Along with meeting the criteria, you’ll need a good or excellent credit score for a successful application. If you’re newly self-employed, you may have to provide extra documentation or proof of income during the leasing process.

Benefits of self-employed business leasing

Self-employed individuals enjoy a range of business leasing benefits, including:

1. Fixed monthly payments

Fixed monthly payments agreed at the start of your lease make it easier to budget and manage costs. They’re tailored to the car you choose and the length of your lease, so you can find a cost-effective option that best suits your needs.

2. Road tax is included

All business car leases come with Vehicle Excise Duty (VED), also known as road tax, included.

3. Access to the latest models

You always get a brand-new car with a lease agreement, so you have access to a range of models with the latest technology, including electric cars.

4. Zero deprecation hassles

As you’re not buying it outright, you don’t have to worry about the car’s depreciation or resale value.

5. You can offset VAT

If your business is VAT-registered, you can claim up to 100% of the VAT back on monthly instalments.

6. It’s tax deductible

Monthly instalments and additional packages, such as maintenance, can be claimed as business expenses, making business leases more appealing to sole traders than personal ones.

7. You’re covered by warranty

Each lease car comes with a full manufacturer’s warranty, typically covering the entire lease period for added peace of mind. However, before choosing a self-employed lease, here are some things to bear in mind:

• Mileage allowance: Exceeding your annual mileage limit may result in excess fees.
• Ownership: You don’t own the car, and must return it at the end of the contract. Other finance options may be better if you want to own it.
• Fair wear and tear: Lease cars are subject to fair wear and tear policies, so excessive damage could incur penalties.
• Early termination: Ending a lease early is possible but may come with costly charges.

Do I pay company car tax if I’m self-employed?

You won’t have to pay company car tax, or Benefit-in-Kind (BIK), on a car leased for business use. BIK only applies if you’re an employee using a company car for both work and personal use.

Car change? Carwow!

Looking for a new set of wheels? With Carwow you can sell your car quickly and for a fair price – as well as find great offers on your next one. Whether you’re looking to buy a car brand new, are after something used or you want to explore car leasing options, Carwow is your one stop shop for new car deals.

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