My client, a self employed sports coach, intends to purchase a car for use in his business. Business use will be approximately 80%.
He wishes to know whether it will be more advantageous from a tax point of view to buy or lease a car.
If he buys the car outright (expected purchase price £6,000) then this will be included in the main pool for writing down allowances at 20% (as the emissions are < 160g/km). The vehicle will be written down by £1200 in the first year, with the allowance restricted to 80% of this value (£960) because of the private use.
If he leases the car, I understand that the amount he can claim as a business expense of the lease cost depends on the emissions of the car, and as long as the emissions are < 160g/km, then the full lease cost (less private use adjustment) can be claimed as a business expense.
He can also claim the fuel costs and maintenance costs (less adjustment for private use) with both options, although I presume there would be less maintenance involved with a lease car if this is included in the lease arrangement.
Am I missing anything important? It is tricky to directly compare the two options as a lease would be of a newer vehicle than the one my client has funds available to purchase, but my client is keen to understand the tax implications of his decision.