Lease a car through a limited company, or buy it on hire purchase?
A limited company can lease a car for its director on a finance lease, or buy one on hire purchase. This guide walks one fully electric Range Rover Sport through both.
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A director's company car. In this video we are going to discuss a director's company car. This is for limited companies only. Our example is a large SUV. It is fully electric. A limited company can use a finance lease or hire purchase. On a finance lease, the company uses the car. But the company does not own it. On hire purchase, the company owns the car at the end. We do not pick one way for you. Ask your accountant which way suits your company. Talk to us before you order the car from the dealer. You can buy from any dealer you like. But you may need a dealer who will invoice your lender. Our guide has two finance examples, and questions for your accountant. Apply online with Donnie, our AI agent, 24/7. Or call our team on 01463 652 653. Thanks for watching!
Our team are finance brokers in Scotland, working across the whole UK. This guide is general information, not tax advice. We do not recommend one way over another. Take advice from a qualified accountant or tax adviser.
Can a limited company lease or buy a car for its director?
Yes. A limited company can get a car for its director on a finance lease or hire purchase.
Our example is the fully electric Range Rover Sport Dynamic SE. Electric cars are in the lowest band for company car tax.
What does a finance lease through the company mean?
On a finance lease, the company pays a set amount each month to use the car. The company does not own it.
| What | On a finance lease through the company |
|---|---|
| Who pays | The company pays each month. |
| VAT | With private trips too, the company can usually get back half the VAT. The other half is a cost. |
| Profits | The payments are usually set against the company's profits. Cars with higher emissions can lose part of that. |
| The director | Pays income tax on the car as a benefit in kind. This is called company car tax. |
| The company | Pays employer National Insurance on that benefit too. |
A finance lease ties the company to every rental too. Ask what ending early would cost.
Read GOV.UK on VAT on cars and company car tax rates.
Can a limited company buy a car on hire purchase?
Yes. Buying a car through a limited company usually means hire purchase. The company pays a deposit, then monthly payments. After the last payment, and any balloon (a bigger last payment), the car belongs to the company.
| What | On hire purchase through the company |
|---|---|
| VAT | The company usually cannot get back the VAT if the director drives the car for private trips too. |
| Profits | The company gets tax relief on the car's cost instead. A new electric car can qualify for all of it in the first year. On hire purchase, the car usually needs to be in use by 31 March 2027. Ask your accountant if this applies. |
| The director | The same company car tax as on a finance lease. |
| The company | The same employer National Insurance. |
On hire purchase, the company is tied to every payment, and pays interest. If payments stop, the lender can take the car back.
What could the finance look like on this car?
Finance on this car could look like these two examples, dated 24 October 2026. They are not an offer or a quote, and are for information only. We do not give quotes online. Every case is different. We are a broker, not a lender. A broker cannot give approved figures until a lender has said yes and set its terms. Finance is subject to status. These examples are for limited companies only, and are not a representative example. The figures can change, and the two examples are not like for like.
A finance lease example
- The price is £91,508.33, plus VAT.
- 12 monthly rentals are paid up front.
- Then there are 60 monthly rentals.
- Each rental is £1,507.00, plus VAT.
- The documentation fee is £250, plus VAT.
A hire purchase example
- The price is £91,508.33, plus VAT of £18,301.67.
- The deposit is £18,084.
- The VAT is paid with the third payment.
- Then there are 60 monthly payments of £1,502.55.
- The documentation fee is £250. The option to purchase fee is £300.
- The total cost of finance is £17,278.67.
Should I get finance before I order the car?
Yes. Talk to us before you place an order with the dealer. Ask us to get finance approved for the full price of the car you want. Approval is not certain. Then the money is there, even with no discount.
Buy from any dealer you like. But some dealers will only invoice their own finance partner. You may need a dealer who will invoice your lender.
Finance lease or hire purchase: what is the difference?
The main difference is who owns the car at the end.
| What | Finance lease through the company | Hire purchase through the company |
|---|---|---|
| Who pays | The company. | The company. |
| VAT back | Usually half, with private use. | Usually none, with private use. |
| Company car tax | Yes. | Yes. |
| At the end | Usually, you keep using it for a small yearly rental until it is sold or scrapped. | The company owns it. |
What changes in 2028?
From April 2028, company car tax on electric cars is 7%, then 9% a year later. It is 4% in 2026 to 2027. Plug-in hybrids of 1 to 50 g/km go up to 18%. Electric cars are also set to pay for each mile driven. GOV.UK sets out the company car tax rates to 2030.
Frequently asked questions
Can a new limited company lease a car?
Often, yes. A lender may ask for a deposit, or for the director to sign a personal guarantee.
What is the difference between a finance lease and contract hire?
A finance lease with no balloon usually has no mileage limit or condition to meet. That can suit high mileage, farms and work sites. Contract hire usually comes with a mileage limit, and the car goes back at the end.
Is a finance lease tax deductible?
Usually yes. Ask your accountant.
Is a double cab pickup a car or a van?
For company car tax, most count as cars from 6 April 2025. Some were bought, leased or ordered before then. They keep the van rules until they are sold, the lease ends, or 5 April 2029. GOV.UK explains.
Does applying affect my credit score?
Applying to us is not a credit check. With your OK, our team then runs a light credit check, often known as a soft search. A lender may run its own checks later.