Business vs Personal Car Leasing, Which Is Right for You?

When it comes to car leasing, choosing between a business lease deal and personal contract hire (PCH) can be a big decision. Each option comes with its benefits, tax considerations, and costs, but the right choice depends on how you plan to use the vehicle and whether you're leasing as an individual or on behalf of a business.

At Motorlet, we’re a leasing company, helping individuals, sole traders, and limited companies find the best car lease deals for their needs. Whether you're looking for flexibility, tax advantages, or just a predictable fixed monthly payment, we’ll guide you to the most cost-effective solution.

What Is Business Car Leasing?

Business car leasing is designed for organisations and business owners who use vehicles for business purposes. This includes limited companies, sole traders, LLPs, partnerships, and VAT-registered businesses.

With business leasing, your company takes out the lease agreement, and the car is used for work-related travel. The lease is typically set up on business contract hire, and depending on your usage, VAT can be claimed back, up to 100% for business-only use or 50% if the vehicle is also used for personal journeys.

Key Benefits of Business Leasing:

• Access exclusive business lease deals

• Monthly payments are often cheaper than a personal lease

• Offset costs against your taxable profits

• VAT can be claimed if you're VAT-registered

• Ideal for company cars or fleets

However, if the car is used privately, you may need to pay company car tax, also known as Benefit in Kind (BIK). The amount depends on the car's P11D value, CO₂ emissions, and fuel type.

What Is Personal Car Leasing?

Personal car leasing, or Personal Contract Hire (PCH) is an affordable, flexible way of car users getting behind the wheel of a brand-new car without the burden of ownership. With PCH, you pay an initial payment (like a deposit) followed by a sequence of fixed monthly payments, usually over 2 to 4 years.

At the term's end, you give the vehicle back to the leasing company with no worrying about depreciation or resale.

Why Choose Personal Leasing?

• Hassle-free access to new cars with no balloon payment

• Ideal if you're not eligible for a business lease

• Set your annual mileage and contract length upfront

• Just pay for fuel, insurance, and an optional maintenance package

• Return the car at the end with no obligation to buy

Just remember, if you go over your agreed annual mileage, an excess mileage charge will apply.

Business Lease vs Personal Lease – Key Differences

Why Is Business Leasing Often Cheaper?

You will find that commercial leases are less costly than domestic leases. This is because:

• Businesses can claim back VAT, reducing total costs

• Leasing companies offer better rates for company car or fleet contracts

• Businesses can claim monthly payments as an expense

• No personal credit risk if in the company's name

This especially makes business leasing highly appealing to sole traders, freelancers, and limited companies who use vehicles for business purposes.

Which Option Is Best for You?

Still not sure if business or personal leasing suits you? Your best option is based on how you'll be using the vehicle and, most importantly, your figures. If you're a sole trader, VAT-registered, or a director of a limited company and using the car mainly for business, a business lease can be more tax-effective. If the vehicle is for commuting, family, and social journeys, a Personal Contract Hire (PCH) is straightforward with fixed monthly payments.

From experience, the "right" answer differs by context:

·         High-emission luxury used mostly personally? PCH often wins.

·         Low-emission or electric mainly for business? Business lease usually makes more sense.

·         New business with no or limited trading history? PCH may be easier to approve.

·         Established company that wants tidy accounts? Business lease keeps it cleaner.

Whichever you decide, Motorlet can arrange the lease to suit your mileage, term, and budget. The most sensible next step is to have a chat with your accountant, they'll crunch the numbers and reveal which choice leaves more in your pocket. Still unsure how to get a business lease car? Get in touch and we'll discuss your options in plain English. We won't put you to sleep with tax calculations (unless you want us to, and even then, we'll do our best to make them entertaining!).

Speak to the Leasing Experts

Whether you're looking for business cars or a new family SUV, our team can help guide you to the right car lease deals for business and personal use. We'll go over each of the benefits with you so you can make a money-saving choice that's right for you, whether you are looking for a deal for a salary sacrifice or company car!

Contact us today for expert guidance and a free no-obligation quote.