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Should You Buy a Car Under Your Company Name as a PPC? — The Ultimate Guide for UK Business Owners

Last updated: May 18, 2025, 9:17 a.m.


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In today's economic environment, UK business owners are constantly seeking smarter ways to manage expenses and reduce tax liabilities. One increasingly popular route is to purchase a car under the company name as a PPC (Privately Purchased Car for business use).

But is this truly a financially savvy move?

In this in-depth guide, we'll explore everything from tax implications to brand preferences, loan impact, and future borrowing considerations. By the end, you’ll be able to decide whether this route fits your company’s needs.

🚗 What Is a PPC Car in Business Terms?

A Privately Purchased Car (PPC) is a car bought under the company name but used either partly or entirely for business. It differs from a lease or pool car in that it’s usually a capital purchase and owned by the business, making it eligible for tax deductions under certain conditions.

📊 Are Businesses Actually Doing This?

Yes. Trends show that UK directors and small businesses increasingly prefer to buy vehicles through their limited companies.

  • 2018: ~55% of company cars were leased.

  • 2022: PPC-style purchases rose by 18%, especially in sectors like real estate, hospitality, and consulting.

  • The rise in electric vehicles (EVs) further pushed this trend due to significant tax benefits.

🚘 Top Car Brands Businesses Buy in the UK

Brand Reason for Popularity
Tesla 0g/km CO₂, low BIK tax, 100% first-year allowance
BMW Executive image, efficient hybrids
Mercedes Business class feel, hybrid models
Toyota Reliability and strong resale value
Volkswagen Balanced fleet choice (Golf, Passat)
Kia/Hyundai EV innovation, long warranties

✅ Advantages of Buying a Car as a PPC

  1. Capital Allowances
    Claim part or full vehicle cost as a deduction. EVs allow 100% First-Year Allowance.

  2. Running Cost Deductions
    Fuel, insurance, MOT, road tax, and servicing are partially or fully deductible.

  3. VAT Reclaim
    Possible if car use is 100% business-related. Partial claims allowed on fuel & maintenance.

  4. Professional Image
    Projects a more established business presence.

  5. Credit Profile Boost
    Loan repayments help build your business credit if managed well.

❌ Disadvantages to Consider

  1. Benefit-in-Kind (BIK) Tax
    Personal use triggers BIK tax, especially for non-EVs. Rates can be up to 37%.

  2. Strict VAT Rules
    Personal use disqualifies full VAT claims.

  3. Insurance Costs
    Business car insurance is often higher than personal cover.

  4. Depreciation Affects Balance Sheet
    The car appears as a depreciating asset.

  5. Resale Capital Gains Tax
    Depending on how it was claimed and used.

📈 Basic Tax Relief Calculation

Scenario: Buy a Tesla Model 3 for £42,000

  • Qualifies for 100% First-Year Allowance

  • Pre-tax profit: £80,000

Calculation:

  • Deduct £42,000 = Taxable profit: £38,000

  • Corporation Tax saved (19%): £7,980

✅ Big savings for EVs. Petrol/diesel savings are lower.

💳 What Happens When You Apply for a Business Car Loan?

  1. Company Credit Check
    Requires CRN, bank statements, company accounts, and possibly a director guarantee.

  2. Loan Type

    • Hire Purchase (HP)

    • Asset Finance

  3. Monthly Repayment Scenario

    • £42,000 car

    • 10% deposit (£4,200), 6% APR, 5 years

    • ~£700/month repayment

    • Total repayment: ~£48,000

  4. Accounting & VAT
    Still treated as a company asset. VAT may be partially reclaimable.

💸 Impact on Future Business Loans (e.g., Buying Property)

Applying for a car loan under your company name impacts your ability to borrow again:

  • Business Credit History: Timely payments help. Missed payments hurt.

  • Debt-to-Income Ratio: New car loan adds monthly debt. Higher debt = reduced borrowing capacity.

  • Cash Flow Assessment: Property lenders check your monthly expenses. Existing car repayments lower your affordability.

  • Personal Guarantees Stack Up: Multiple personal guarantees may limit your ability to secure larger loans (like mortgages).

🔹 Planning to buy property soon? Keep DTI and PG exposure low.

🔹 Summary Table: Personal vs Company Car

Feature Personal Car Company Car (PPC)
Tax Deductible? ❌ No ✅ Yes (if business use)
BIK Tax ✅ No ❌ Yes (if personal use)
VAT Reclaim ❌ No ✅ Possible (limited)
Depreciation Impact ✅ None ❌ Affects balance sheet
Insurance Type Standard Business/Commercial

🔧 Final Tips Before You Buy

  • Choose low-emission or electric vehicles

  • Talk to an accountant or tax advisor

  • Keep a mileage log for mixed-use cars

  • Separate personal and business use clearly

  • Always compare business loan offers

💬 Final Thoughts

Buying a car under your company name as a PPC can be a smart tax-efficient strategy if planned well. It helps with image, deductions, and credit building — but brings complexity too.

If you plan to expand your business, purchase property, or apply for larger finance, make sure this car loan doesn’t interfere with future lending potential.

Need help comparing your options? At CompareInterestRate.uk, we offer tools to evaluate car finance, business loans, and leasing offers — all in one place.

⚠️ Disclaimer

The information provided in this blog is for general guidance and informational purposes only. While we strive to keep the content accurate and up to date, tax laws and vehicle finance regulations may change.

Always consult a qualified accountant, financial advisor, or tax professional before making any decisions about vehicle purchases or loan applications through your business.

Neither CompareInterestRate.uk nor the author is liable for any outcomes arising from reliance on this content.