When it comes to acquiring vehicles for your business, deciding between leasing and buying is a critical financial and operational decision.
With the rise of electric vehicles (EVs) and increasingly generous government incentives, businesses now have more options than ever before.
In this guide, we’ll break down the pros and cons of leasing vs buying business cars and explore which might be right for your organisation.
What’s the Difference Between Leasing and Buying?
Leasing involves renting a vehicle from a provider for a set term (usually 2–4 years), paying fixed monthly fees, and returning the vehicle at the end of the agreement. You never own the vehicle, but you also avoid long-term depreciation and resale worries.
Buying (either outright or via finance) means your business owns the vehicle. You can use it as long as you like, modify it, and sell it later – but you’re responsible for maintenance, depreciation, and disposal.
Advantages of Business Car Leasing
The increasing popularity of electric vehicles, particularly among environmentally conscious companies, has made leasing more attractive.
1. Tax Efficiency
Business car leasing can be highly tax-efficient. For example:
- Lease payments may be fully deductible as a business expense.
- Electric vehicles enjoy 3% BiK tax, which makes them much cheaper for employees.
- There’s no road tax (VED) for EVs and reduced or zero charges for Clean Air Zones.
2. Cash Flow Benefits
Leasing avoids the large upfront cost of buying a vehicle. You only pay an initial rental (usually 1–3 months of payments) and manageable monthly fees, freeing up capital for other business needs.
3. Predictable Costs
With leasing, your costs are fixed and predictable. Many agreements include servicing, maintenance, and breakdown cover – ideal for budgeting.
4. Latest Technology
Leasing allows your business to refresh its vehicle fleet every few years, keeping up with the latest EV tech, range improvements, and safety features.
5. No Depreciation Risk
EVs depreciate quickly due to rapid tech changes. Leasing transfers this risk to the provider, so you’re not left holding a car worth far less than you paid.
Disadvantages of Leasing
1. Mileage Limits
Most leases include annual mileage restrictions. Going over can mean additional charges.
2. No Asset Ownership
You don’t build any equity with leasing. Once the term ends, you return the vehicle with nothing to show for the payments made.
3. Early Termination Fees
Ending a lease early can be expensive. Flexibility is limited compared to owning a car you can sell or keep as needed.
Advantages of Buying a Business Car
1. Asset Ownership
The vehicle is an asset on your balance sheet. You can sell it whenever you choose and potentially recover some of the cost.
2. No Usage Restrictions
There are no mileage limits or return condition clauses. You can use the vehicle as needed and customise it to fit your branding.
3. Better for Long-Term Use
If you plan to keep a vehicle for many years, buying may be more cost-effective in the long run – especially if you’re not concerned about depreciation.
Disadvantages of Buying
1. High Upfront Costs
Buying outright requires significant capital. Even with finance, you’ll likely need a deposit and face higher monthly payments than leasing.
2. Depreciation
Electric cars, in particular, can lose value rapidly due to battery improvements and evolving regulations. You’re exposed to this financial risk if you own the vehicle.
3. Maintenance and Repair Costs
Once the warranty expires, repair and maintenance costs fall entirely on your business – unlike with most lease agreements.
Did You Know There’s A Third Option?
Beyond traditional lease or purchase, the electric car salary sacrifice scheme offers a hybrid solution.
Salary sacrifice lets employees drive new electric cars at significantly lower costs, thanks to tax and National Insurance savings.
This has become increasingly popular with companies that want to offer benefits, reduce emissions, and keep costs predictable – all without the downsides of ownership.
Read more: Why EV Salary Sacrifice is an Easy Win for Your Business.
So, Which Is Best For You?
It depends on your business needs. Use this guide as a framework:
| Business Need | Better Option |
| Cash flow flexibility | Leasing or Subscription |
| Asset ownership | Buying |
| Employee benefits | Salary Sacrifice |
| Cutting-edge EV access | Leasing |
| Long-term use (5+ years) | Buying |
| Tax efficiency | Leasing / Salary Sacrifice |
| Minimal admin | Subscription |
In many cases, leasing or salary sacrifice schemes provide the best balance of cost control, flexibility, and tax efficiency – particularly with electric vehicles.
Start Growing Your Fleet
Choosing between leasing and buying for your business car strategy depends on your priorities: cost, control, flexibility, or tax optimisation.
With the shift toward electric vehicles and the increasing appeal of low-emission fleets, leasing or salary sacrifice schemes often deliver the best value for forward-thinking businesses.
Here at EZOO, we make it simple to access EVs through tailored subscriptions and salary sacrifice plans. It’s never been easier to futureproof your company fleet.
Frequently Asked Questions
Is leasing better than buying for small businesses?
Yes, often. Leasing helps preserve cash flow and avoids the financial burden of ownership, which can be especially beneficial for SMEs.
Can we lease electric cars through salary sacrifice?
Absolutely. Salary sacrifice schemes are one of the most tax-efficient ways to provide EVs to employees, often costing less than a rail season ticket.
Can we lease electric cars through salary sacrifice?
Absolutely. Salary sacrifice schemes are one of the most tax-efficient ways to provide EVs to employees, often costing less than a rail season ticket.
What happens at the end of a business lease?
You return the vehicle and can choose a new one. There’s no need to sell or worry about depreciation.
Are EV subscriptions the same as leasing?
Not exactly. Subscriptions are even more flexible – typically month-to-month – with fewer long-term commitments and bundled services.
What are the tax benefits of leasing electric vehicles?
Leased EVs enjoy 100% first-year allowances (if purchased), low BiK rates, no road tax, and possible VAT reclaim options – offering major savings for businesses.
Related guide: Salary Sacrifice Cars vs Personal Lease.