There has been big changes in the UK car leasing market, with more and more private individuals following businesses into contract hire instead of purchasing.
UK Car Leasing
What comes to mind when the topic of UK Car Leasing is initiated? If you are working in a job that requires frequent travel or even a job where you are offered a company car, you may associate the UK Car Leasing industry as a strictly corporate affair. But, times have been changing.
Historically, the UK vehicle leasing sector has been dominated by businesses and fleet vehicles. This is simply because companies are more likely to minimise their liabilities and vehicle owning can be a great one of those. Vehicle ownership, with the changing structure of regulations and introduction of added environmental controls, extends the physical holding. In fact, the disparity between leasing and owning a car for a company, especially in the case of small and medium sized vehicles, is up to such a degree that it may never be smart for a company to own such vehicles.
So, what do we mean by times are changing in the UK vehicle leasing sector?
Companies act in a manner because it is beneficial for them in the long run. And, they do so with the careful consideration of all ground factors. You can be assured that it is someone’s job to look for the interest of an organisation when a major decision is made. But, what are companies?
Companies are legal entities that are treated as separate beings in the eyes of the law. But, in reality, they are mere extensions of the humans that run them. So, when a company works in a certain manner, you can be assured that the lessons are extendable.
We are finally here. The UK Car Leasing sector is going through a major change on the personal lease side. In fact, the share of personal leases has not exceeded commercial leases.
We just established the tendency of organisations to minimise their liabilities. The inclusion of personal leasing into the equation takes smart financing to the next level.
The BIK and Taxable Allowances
BIK, or simply the company car tax for drivers, has been on the rise. You can track the recent numbers on the Fleet News or by clicking here. Similarly, vehicle emissions are now a major factor in calculating taxable allowances. Further, Pendle recently wrote a blog article on understanding BIK here.
The combination of BIK and Taxable allowances have a major impact on how UK companies are and should look at their leasing strategies.
By changing to a personal lease system for employees, companies are able to change to a monthly payment plan as compared to being liable to greater costs. In order for this to be applicable, the lease has to be personal. The organisation, in this case, can then subsidise the lease for the employees instead of holding the liability to pay directly for the lease.
There is a positive for the employees in this case too. The freedom to choose your own car and changing it at the end of a contract in a swift manner. Simply, less trouble for organisations and happier employees.
To discuss your car lease needs, please feel free to get in touch. We look forward to working with you.
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