What many people do is they buy their first car through
their Business. This takes the expense away from their personal
lives and puts it on their Business, which can be
very tax efficient if done in the right way.
However, it is a big decision to make and it can be difficult to know
whether to lease, buy outright or buy on finance.
Let’s take a look at some of the key aspects of the decision to help you choose the right vehicle for you.
How much will it be worth in 5 years?
One of the first questions you should be asking yourself is how much will the vehicle
sell for in a few years time. If the vehicle is a brand name it’s more likely to retain its value.
Therefore, a Mercedes or BMW will likely retain more of its value if sold on a site like Gumtree or UK Classifieds.
If you buy new, however, you may lose a lot of value on these cars very quickly and so you may
want to buy a second-hand well serviced vehicle. Take a look at the cost of vehicles 3 and 5 years
older than the ones on your shortlist. This will help you to understand how much value you are likely
to lose over that period. Certain cars lose very little, whereas others could lose you thousands of pounds.
How Long is it for?
You need to have a think about how long you want this car or van to work for you.
It could be that you are looking for an interim solution while your business grows to the next level.
It could be that you are looking for a vehicle that you will pass down onto
sales representatives, or other staff in your company.
Whatever the case may be you should be mindful of the requirements of the car as they change
over the lifespan of your ownership. If you get the right vehicle it will be multifunctional within
your organisation and will project a great image throughout.
You’ll probably want to get a car that is fairly fuel-efficient so that it doesn’t guzzle petrol.
If it does you will be at the petrol station cursing your luck every day or so. However, the
fuel that goes into your car is likely to be tax-deductible and this may not be a major concern.
It really depends on the dynamics of your business and how cash which you are. If you’re looking for
fuel-efficient car then you might like to go for a hybrid, or even electric vehicle. If you are doing a lot
of driving around town then fuel efficiency will be more important than if you are a motorway
driver where larger cars are more efficient than on the urban streets.
If you want to have a vehicle that represents your company then you may want to go with a green car.
Again these green cars are fuel-efficient and generally cheap to run and to tax. They can project a really
positive image of your company as you drive around the streets, especially if you have your
vehicle heavily branded with stickers.
What do you like?
Of course, just as when you’re buying a personal car you should think about what you like.
Do you want a 4×4 or a convertible? Is it the brand that really floats your boat?
When buying a business vehicle you can choose to have something that really reflects you.
If you are the figurehead of your company then the vehicle you drive is important to not
only your image but also the image of the company.
You may want to get a personalised plate to further enhance this image.
Ask yourself the question “if money was no object what would I buy?”
This question won’t necessarily get the answer of the car that you will be
buying for your business, but it might direct you towards the answer.
Choosing a car for your business really is about functionality, financial capacity and image.
You need to shop around and look for deals and decide whether you want to buy or to lease.
You should also think about whether you want to get a second-hand vehicle or to buy new.
The specific answers to these questions will really be driven by your personal
preferences and the situation within your company.
Whenever you’re making a financial decision it is always good to speak to an accountant to find
out what they would suggest. They may well be able to guide you on the best way forward.