LEASING CARS
Under a Finance Lease or an operating
lease, the lessee (user of the vehicle) does not
become the owner of the vehicle. The "risk
or reward however on a Finance Lease is assumed
by the user (Leesor).
On an operating lease, the "risk or reward"
is assumed by the lesser (Finance Company). Vehicles
funded through a Finance Lease appear on the balance
sheet. Both are tax advantageous, however as a percentage
of rentals can offset against taxable profits.
On cars this allowance against tax is 100% on cars
costing upto £12,000. Over that it is calculated
on a percentage according to the half the difference
rule.
List price
of car less £12, 000
Divided
by 2
All divided
by list price of car
or alternatively
1/2 (Retail price - £12,000)
Retail
price
Amount of Car Leasing Rentals
allowable against tax
(Using the formula above)
| £12,000 |
100% |
| £14,000 |
92.85% |
| £16,000 |
87.50% |
| £18,000 |
83.33% |
| £20,000 |
80% |
| £30,000 |
70% |
| £40,000 |
65% |
| £50,000 |
62% |
| £60,000 |
60% |
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