Buying a Car Through My Business

Can I Buy a Car Through My Business?

If you’ve ever wondered, ‘Can I buy a car through my business?’—not only is it possible, it’s often a smart move for many business owners. However, it does come with rules, tax implications, and benefits that are important to understand before making the leap.

In this guide, we’ll break down everything you need to know. From tax benefits to finance options and how to decide if it’s right for you, we’ll walk you through the entire process. Plus, we’ll share how working with a trusted finance broker like us at First Oak Capital can make the whole experience much smoother.

Why Buy a Car Through Your Business?

There are plenty of reasons why buying a car through your business might make sense. For one, it could reduce your tax bill. It can also help improve your cash flow by spreading the cost over time with finance. And, let’s face it—it just feels more official.

Not only does your business get a vehicle, but it can also come with allowances and tax deductions that are not available when purchasing personally.

How It Works

Let’s say your business needs a car. Maybe you’re doing client visits, making deliveries, or simply need it for day-to-day travel. In that case, your business can either purchase the car outright, lease it, or use asset finance options like hire purchase.

Each option has pros and cons.

• Buying outright gives you full ownership.
• Leasing keeps monthly payments lower.
• Hire purchase gives you ownership after the last payment.

Regardless of the method, the vehicle would be purchased in the name of the business.

Who Qualifies?

Most UK businesses can buy a car, including:

• Sole traders
• Limited companies
• Partnerships

However, the key is showing that the car will be used mainly for business purposes. That doesn’t mean you can’t use it for personal reasons, but the more business-related the use, the better the tax benefits.

Tax Implications

Here’s where it gets interesting.

When you buy a car through your business, it affects your corporation tax, VAT, and even benefit-in-kind (BIK) if you’re a director or employee using it personally.

1. Corporation Tax Deductions
   • You may be able to claim capital allowances.
   • These deductions vary depending on CO2 emissions and the vehicle type.
2. VAT Reclaim
   • If you’re VAT registered, you might reclaim some or all of the VAT.
   • The car must be used 100% for business to reclaim full VAT.
3. BIK Tax
   • If you or your employees use the car personally, it’s considered a benefit.
   • You’ll pay tax based on the value of the car and CO2 emissions.

It’s important to consult with an accountant to get this right. If you’d like to learn more about tax implications and capital allowances please check out GOV.UK: Claiming Capital Allowances or give us a call and we’d be happy to answer your questions. 

What Types of Vehicles Can You Buy?

You can buy almost any type of car—from hatchbacks to electric vehicles. However, the type of vehicle impacts the amount of tax relief you get.

For instance:

• Low-emission vehicles often qualify for better tax deductions.
• Commercial vehicles like vans are taxed differently from cars.
• Electric vehicles currently enjoy a 0% benefit-in-kind rate (subject to change).

Should You Buy a New or Used Car Through Your Business?

Once you’ve decided to buy a car through your business, the next big question is—should you go for a new car or a used one?

Well, both have pros and cons, and the right answer depends on your budget, business goals, and how the vehicle will be used.

New Cars: The Upside

Buying a brand-new car might feel like a luxury, but there are solid business reasons to do it.

• Manufacturer warranties give peace of mind.

• Latest tech and fuel efficiency can reduce running costs.

• Stronger tax incentives may be available—especially for low-emission or electric vehicles.

• Better image if your business involves face-to-face meetings or client visits.

However, new cars lose value quickly. Depreciation can be steep in the first year, so it’s something to factor into the equation.

Used Cars: The Smart Saver’s Option

A used car might not have that new-car smell, but it could save your business thousands.

• Lower purchase price means smaller finance deals.

• Slower depreciation after the initial drop.

• More affordable insurance in many cases.

That said, older cars may need more maintenance. And you may not get as much tax relief, depending on the CO₂ emissions or if it’s still under warranty.

What’s Better for Tax?

Here’s where it gets tricky.

Newer, low-emission cars often come with more generous capital allowances and lower benefit-in-kind (BIK) tax. That could make a big difference over a few years.

Used cars can still qualify for deductions, but you’ll need to check eligibility—especially if it’s an older model with higher emissions.

What We Recommend

We often help clients finance both new and used vehicles. In fact, many clients come to us with a specific car already in mind—sometimes brand new, sometimes lightly used.

Our job is to run the numbers, compare tax implications, and secure the best finance deal for whichever route you choose.

Whether you’re buying fresh off the lot or looking at a reliable used option, we make sure the finance works for your business—not the other way around.

Finance Options for Buying a Car Through Your Business

Business finance makes car ownership easier to manage.

• Hire Purchase: You pay monthly, then own the car outright
• Finance Lease: You rent the car and may share in the resale value
• Contract Hire: Like a long-term rental, but without ownership
• Term Loan: Not secured on the car but comes with less paperwork

These options all work differently. The right one depends on your goals, cash flow, and tax situation.

Things to Consider

Before jumping in, think about the following:

• Will the car be used mostly for business?
• Can the business afford the upfront or monthly costs?
• Is the tax benefit worth it versus personal ownership?
• Do you have the right paperwork and records?

The more you prepare, the smoother the process.

Work With First Oak Capital

Finding the right loan with the right lender on your own can be tricky. We simplify the process, working with our list of trusted lenders who understand business finance. Whether you’re a sole trader, limited company, or partnership, we can help you secure funding quickly and efficiently.

Click here to explore our Campervan & Motorhome Finance options.

How We Can Help

Applying for Car Finance through your business alone can be frustrating. Whether your looking to buy a new car through your business or a used car through your business, we make it easier by:

• Finding the right lender for you.
• Helping you prepare your application.
• Improving your approval chances.
• Finding you the best deal available.

Let us guide you through the process, answer your questions, and help you secure the funding you need. Call us today or complete the form on our website to get started.