Owning a car that’s been purchased through a UK-based limited company is a viable option for a business. However, it’s worth evaluating whether this is really your best option, or whether there are more suitable alternatives.

Can you buy a car through a UK limited company? 

The short answer is yes. However, there are a number of variables that you need to consider, which include the vehicle type, usage, and its CO2 emissions. 

Benefits in kind  

One of the first things to ask yourself before deciding whether or not to buy a car through your limited company is what that car will be used for. If you are using it for any private use – including the commute to and from work – your company will need to pay a tax called ‘benefit in kind’ (BIK). This is based on the value of the vehicle when it was new. The company will also need to pay Class 1A National Insurance. 

You can only claim back VAT on a car that’s used exclusively for work purposes. Similarly, you may end up being taxed on fuel in addition to the BIK tax.  

It’s also worth noting that having a car through a limited company means putting its day-to-day running costs through company accounts, which may impact profit margins. 

Capital allowances 

If you choose to buy a car through your UK limited company, you’ll be able to claim tax relief through capital allowances. The amount you can claim, however, is dependent on the car’s CO2 emissions. The more CO2 released, the higher the tax you’ll need to pay. 

Financing a car through your limited company 

Car finance is a sensible option if you’re looking to spread the cost of a car when buying through your limited company. Calculate your car loan online or contact our team to talk more about buying a car through your limited company. 

Rates from 6.9% APR. Representative APR 13.9%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating

Excellent

  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed

Good

  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs

Fair

  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit

Poor

  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past

Bad

  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan
£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*for illustration purposes only

No impact on your credit score

Representative Example

Borrowing £7,500 at a representative APR of 13.9%, annual interest rate (fixed) 13.85%, 47 monthly payments of £201.38 followed by 1 payment of £211.38 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £2,176.24, total amount payable is £9,676.24.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!