Compare
Buying a vehicle through your limited company vs personally
Reviewed by Luca Scalzo, Director, WFYA Limited · Last reviewed
Buying through your limited company usually works best for vans and for electric cars, because vans carry a simpler tax charge and electric cars have low benefit in kind rates. For petrol and diesel cars that a director also uses privately, buying personally and claiming business mileage from the company is often simpler and can cost less in tax. The right answer depends on the vehicle, how it is used and your own tax position.
This page explains the main differences. It is general information, not tax advice: check the numbers with your accountant before you decide.
How do the two routes compare?
| Through your limited company | Personally | |
|---|---|---|
| Who owns or finances it | The company, which signs the finance agreement | You, with personal finance or savings |
| Personal tax on a car | Benefit in kind charge on the director if the car is available for private use, based on list price and CO2 emissions | No benefit in kind |
| Company costs | Company pays employer's Class 1A National Insurance on the benefit | Company can pay you approved mileage allowances for business journeys, tax free up to HMRC rates |
| VAT on a car | Usually not reclaimable on purchase if there is any private use; on a lease, usually half the VAT on rentals is reclaimable | Not reclaimable |
| VAT on a van | A VAT registered company can usually reclaim it | Not reclaimable |
| Capital allowances | The company can usually claim them on a car it owns or buys on hire purchase, at rates linked to CO2 emissions; vans normally qualify for the Annual Investment Allowance | Not available to you personally |
| Finance | Assessed on the company, often with a director's guarantee | Consumer credit assessed on you, with different rules and protections |
When does buying through the company make sense?
- The vehicle is a van used for work.
- The car is electric, so the benefit in kind charge is low compared with petrol and diesel.
- The vehicle is used almost entirely for business and has little or no private use.
- You want the company's profits, not your personal income, to pay for it.
When does buying personally make sense?
- It is a petrol or diesel car with significant private use and a high list price.
- You drive a moderate number of business miles and can claim mileage from the company.
- You want to keep the car if you close or sell the company.
What about electric company cars?
Electric cars currently have much lower benefit in kind rates than petrol or diesel cars, and new zero emission cars have qualified for enhanced capital allowances. This is why many directors choose an electric company car. The rates and allowances are set by the government and change over time, so check the current figures on GOV.UK before you buy.
Sources
Checked on 31 October 2026.
Frequently asked questions
Is it better to buy a car through my limited company?
It depends. For an electric car or a van, the company route is often efficient. For a petrol or diesel car with private use, the benefit in kind charge can make the personal route cheaper. Compare both with your accountant.
Can my limited company finance a car on hire purchase?
Yes. The company signs the agreement and makes the payments. Lenders assess the company and often ask a director for a personal guarantee. See business car finance.
Can I claim VAT back on a company car?
Usually not on the purchase price if the car is available for private use. On a lease, a VAT registered business can usually reclaim half the VAT on the rentals. Vans are treated differently. See the VAT guidance in the sources below.
Does a company van create a tax charge?
If a company van is available for private use beyond what HMRC treats as incidental, there is a van benefit charge, which is set as a fixed amount rather than linked to the list price. Check the current rules on GOV.UK.
Can I move my personal car into my limited company?
You can sell your car to the company at market value, but there are tax consequences on both sides. Speak to your accountant first.
Talk to us about your asset
Tell us what you want to finance. Our team reviews every application and comes back to you.
Start your application