Lending money to limited company for leasing car

[motty]

Good afternoon.

I recently started limited company, as being a new company it is challenging to find a leasing company that will accommodate.

I have the personal funds available to lend to the business in order to pay the full leasing term in one payment (still waiting back to hear if this would be accepted).

I was wondering if I loaned the money to the company which I know is not liable to CT, would I still get the 50% VAT reclaim and also not have to pay CT on the money I spent on the lease ?

Regards

motty

 

[Scalloway]

I would see this as two separate transactions:

1. Lend your company money
2. Lease a car

 

[WaveJumper]

It will be interesting to see but still not sure it’s going to fly with the leasing companies but do update the forum on your progress best of luck

 

[motty]

So the way I sort of read it is as follows

1. I lend the company the money for the total lease.
2. I can claim 50% VAT back on the lease value
3. Do not pay CT on loan from myself
4. Gain the CT benfit of the lease (not paying CT on the value of the lease).
5. Regain money from loan when figure back in company.
6. I know also possible to claim interest but as I am performing my own accounting with the excellent help of FreeAgent, I think this is a step too far for me.

I will of course update with the answer from the leasing company.

 

[Mark T Jones]

I'm not au fait with car leasing, - @Gordon - Commercial Finance might be - however I'd expect that some companies will deal with start ups with a solid PG.

We do, for start ups buying equipment with no real value!

 

[WaveJumper]

I see from other posts your reluctance to engage an accountant but strongly advice you spend some time and find one who is the right fit for you and your company. In the long run they are not going to only save you a lot of heartache up the road but also money. You need to have a clear understanding of the tax advantages or disadvantages of going down a particular route especially if making large loans to a company or purchasing large assets.

One last thought what if the ltd fails

 

[bovine]

Have you taken into account your benefit in kind tax for the car? And how many miles do you expect to do for business and how are you paying for your personal fuel? In a lot of cases it's more efficient to get a personal lease and claim the mileage, but it can be a complicated calculation. EVs probably make it even more complicated.

 

[motty]

I see from other posts your reluctance to engage an accountant but strongly advice you spend some time and find one who is the right fit for you and your company. In the long run they are not going to only save you a lot of heartache up the road but also money. You need to have a clear understanding of the tax advantages or disadvantages of going down a particular route especially if making large loans to a company or purchasing large assets.

One last thought what if the ltd fails

ltd is one man consultancy. this is the nth time I have a ltd but never had a lease before - i have never been more than £10 off my previous accountants numbers, I just wasnt confident in how to prevent EOY accounts.

The BIK is excellent on the EV so all good. Saving for leasing through ltd is significant and only way i would consider. Just needed to know about if it would be considered the same transaction but previous reply confirms that the two things are seperate entities.

 

[WaveJumper]

As above has already suggested have you considered the tax implications of having a company car my understanding is it could be the least efficient way to go

 

[WaveJumper]

Interesting reading here over my coffee this mornin:

Best company cars 2026 | Auto Express

We round up the finest company cars across six price bands

www.autoexpress.co.uk

 

[JEREMY HAWKE]

Interesting reading here over my coffee this mornin:

Best company cars 2026 | Auto Express

We round up the finest company cars across six price bands

www.autoexpress.co.uk

Anybody that gives their employee a Fiat 500 nuf said ??

 

[motty]

With a BIK of 2% and the ability to claim 50% of VAT back and it reduces your CT liability, I think it makes much more sense to lease it through company. If I had been trading long enough for the leasing companies I have spoken to for acceptance then I probably would not have posted but I was needing to put personal money in right now to cover this.

There is no danger of company not having funds within next 12mths to clear the loan to myself.

I am looking at Tesla Model Y, 2 year lease looking at approx 19k all in over the 2 years. Would have thought the leasing companies would jump at someone who would pay the whole amount on day 1. We will see and I will update.

 

[WaveJumper]

Be interested to know what delivery date you have been given for that my sons was coming in May changed to June as of yesterday its now the end of September possibly beginning of October but he's not holding his breath.

 

[Gordon - Commercial Finance]

I am looking at Tesla Model Y, 2 year lease looking at approx 19k all in over the 2 years. Would have thought the leasing companies would jump at someone who would pay the whole amount on day 1. We will see and I will update.

If only it was that simple....they can't just look at the 19k as their liability, its the whole price of the car that they're owed for the time you're on the lease. I'm not that up to speed with Tesla prices but I am guessing it would be more than £100k and so that's the exposure that a leasing co need to think about.

You specifically only talk about leasing - is there any reason why that is your preferred funding method?

 

[JEREMY HAWKE]

If only it was that simple....they can't just look at the 19k as their liability, its the whole price of the car that they're owed for the time you're on the lease. I'm not that up to speed with Tesla prices but I am guessing it would be more than £100k and so that's the exposure that a leasing co need to think about.

You specifically only talk about leasing - is there any reason why that is your preferred funding method?

@Gordon - Commercial Finance What do you think of long term rental for the OP ?

 

[Gordon - Commercial Finance]

@Gordon - Commercial Finance What do you think of long term rental for the OP ?

Personally, I would do anything to avoid ever owning a Tesla.....but then I would also never rent one either!

Opinions aside, something which has a poor residual value such as an electric car might be better rented than bought. A true lease is basically a long term rental anyway just with added fees - however the reason I asked what I did is that there are a number of drawbacks to leasing which may be restrictive, especially when it comes to a company asset.

 

[JEREMY HAWKE]

Personally, I would do anything to avoid ever owning a Tesla.....but then I would also never rent one either!

Opinions aside, something which has a poor residual value such as an electric car might be better rented than bought. A true lease is basically a long term rental anyway just with added fees - however the reason I asked what I did is that there are a number of drawbacks to leasing which may be restrictive, especially when it comes to a company asset.

I think I mentioned about a year ago that I went to Bridgwater Auctions and that A finance company had two older Teslas and they never made it anywhere near the reserve . How do they make any money ?

 

[Gordon - Commercial Finance]

I think I mentioned about a year ago that I went to Bridgwater Auctions and that A finance company had two older Teslas and they never made it anywhere near the reserve . How do they make any money ?

One word…..HYPE!

I’ve told the story many a time on this forum about when I got a look at a PCP quote from Tesla themselves. They put a residual value on it after 3 years of only 25% of original value. Most other manufacturers would be at around 45-55% after 3 years.

Even Tesla themselves know it’s not going to be worth much after you’ve done a bit of driving