Thank you to another of our local Greater Manchester personal leasing customers for visiting the CarLease team in their new executive saloon – the Mercedes E Class.
Which is the best executive saloon to lease in 2019? This is a difficult question to answer purely because there is so much great product at the moment in the market.
With the Jaguar XF, BMW 5 Series, Volvo V90 and the new Audi A6, it is almost impossible for a customer to select their preferred leasing option.
When it comes down to making the decision some of it is subjective opinion (how does the exterior/interior look?), the technical info (how much CO2 and what MPG) and the cost per month (is price not always king?).
Much of it comes down the fact that there are not really any bad cars out there now.
Almost all new cars, petrol, diesel, PHEV or electric or otherwise, represent a good offering to most customers and very few are “bad cars”. Because manufacturers work so closely together, they share the technology which benefits their brand and this enables more quality product to be produced. As a credit broker, not a lender or dealership, we don’t actually recommend any specific vehicles as we have no direct relationships with any manufacturer. We effectively present options to the customer and they choose which best meets their needs and requirements on lease. Ford or Porsche, it’s indifferent to us so long as the customer is happy!
For the customer here, we had a very common example of a small owner-managed limited company making the comparison between a personal and a business lease – so which is better in the personal v business debate?
This is not a simple question to answer and customers really do need to give due consideration to the facts and speak with their accountants about the best route moving forwards.
On the business-side, a company which uses contract hire will benefit from a tax efficient product. Unlike purchase-style products which rely on a write-down allowance, contract hire enables a limited company to minimise their corporate tax bill by offsetting their monthly rentals against tax. For a car emitting 110g/km of CO2 or less, 100% of the rentals can be offset against tax whereas for those emitting 111g/km and above are only 85% allowable.
So can I claim back all of the VAT? For a business which is VAT registered, there is an ability to claim back VAT on both the finance and maintenance elements of the rentals. In terms of how much VAT you can claim, this depends on private/business use; if you are using the car outside of work you will ultimately be limited to 50% of the VAT on the finance rentals whereas a pool-car used exclusively for business will be able to receive 100% Vat reclamation.
Also bear in mind that the car’s CO2 will influence how much VAT you reclaim – for a car emitting more than 110g/km of CO2, you would be limited to 85%.
But at least contract hire is an off-balance sheet product? Well until 1 January 2019, any contract hire vehicles a limited company operated were “off-balance” sheet, meaning that these did not appear in the accounts.
Under the IFRS 16 rules, any accounts which are produced on or after 1 Jan of 2019 will need to include contract hire vehicles on the balance sheet, Unless the item has an asset value of less than 5,000 euros and is less than 12 months in contract length, this needs to form part of the accounting position.
In practical terms this will only affect the gearing ratio for a company. It shouldn’t present any relay cause for concern.
But apart from that, a company–car is ok? Contract hire provides a small limited company with fixed monthly rentals, financial certainty, the ability to include maintenance (via a funder-maintained contract) and much less hassle.
The notion that customers can buy and sell cars so to “make money” is essentially a load of nonsense
Leasing brokers, like us, specialise in ensuring that a small business receives a quality vehicle, great service and exceptional value. However, for any employee taking a vehicle through their business, director or not, there will be cost consequences. Running a company car is not “free”, in that the benefit of the car needs to be accounted for with HMRC – see http://cccfcalculator.hmrc.gov.uk/CCF0.aspx. This is calculated based on the car’s P11d (it’s recommend retail price plus Vat and any additional extras bur not VED), CO2 (shown as g/km) and the individuals income tax bracket. In short, the more expensive and more polluting the car is, the higher your tax bill will be.
A handy guide is available on most company car tax websites which highlights the level of Benefit in Kind (BiK) which a customer will be subject to. For example, in 2019/20 a car emitting 105g/km will be liable to a 25% BiK rate whereas in 2020/21 this will be 26%. On the same basis a zero emitting electric car will be 16% in this tax year BUT an astounding 2% from 2020 onwards. For diesel cars, note that any non-RDE compliant diesels will receive a 4% supplement onto their BiK.
For many small limited companies, personal v business leasing is going to come down to tax liabilities and attitudes to risk. A company car is the responsibility of the company and if there are any financial issues, there are no personal responsibilities to the director (so long as there are no director guarantees). However, if the director is paying 40%, or higher, on income tax and is looking at a Range Rover Sport, there needs to be some understanding that this is going to cause some significant tax liabilities every month.
While the amazing electric car leasing options may satisfy their requirements, if the alternative fuel is not suitable a personal car may present a far more tax efficient position. Speak to your leasing broker and accountant to get the best results.
In terms of the car shown here, the Mercedes-Benz E CLASS DIESEL SALOON E220d AMG Line Premium 4dr 9G-Tronic, this is based on the following configuration:
· Iridium silver Metallic Paint
· Artico man-made leather/Microfibre Dinamica – Black
· 19″ AMG 5 twin spoke alloy wheels in titanium grey with high sheen finish
· Black open pore ash wood and centre console
As standard the car includes AMG bodystyling, climate control system, body coloured door mirrors and externals, 19” alloy wheels, agility control suspension, cruise control, privacy glass, active brake assist, active brake system, brake calipers with AMG lettering, hill start assist, AMG floormats, attention assist, blind sport assist, hill hold assist, par assisting pilot (with front/rear assist), stop/start system, COMAND online system with 12.3” screen, wireless charging, analogue clock, DAB radio, steering wheel mounted controls, LED headlights, LED high performance, multibeam intelligent light system, 3 spoke flat bottomed steering wheel, ambient lighting, memory pack, mirror pack, keyless start, stowage pack, warning triangle/first aid and heated front seats. In terms of additional factory options consider adding – night pack and the 20” alloys. Just to note a “premium” pack on the E-Class adds a panoramic glass sunroof, memory pack and reversing camera whereas the “Premium Plus” adds the upgraded music system and keyless go on top of this.
On the technical-side company car and business users can note the P11d at £43,380.00 and CO2 at 127g/km. The 1950CC 9 speed auto diesel engine delivers 61.4 combined MPG (EC), 45.6 combined (WLTP), 194ps and 0-62 times of 7.3 seconds. Service intervals are set every 12 months or 15,500 miles.
So would you select the E-Class leasing option over the other executive saloon cars?
Find the webs best lease car deals on the Mercedes E-Class @CarLease UK…
