The short answer
Yes, many funders will consider used cars for limited companies, usually within age and mileage limits that vary by lender. Benefit in kind on a used company car is generally still based on the car’s original list price, not the lower price you paid.
How used car finance works
Hire purchase is the most common route for used business cars. Some funders also offer finance leases or contract hire on younger used vehicles. The car typically needs a clear history and to be bought from a reputable source.
Benefit in kind on used cars
A common misunderstanding is that a cheaper used car produces a lower benefit in kind. HMRC rules generally use the list price when the car was new, including qualifying options, so check the original list price before deciding.
VAT and the margin scheme
Many used cars are sold under the VAT margin scheme, where no VAT is shown on the invoice and none can be reclaimed. Where VAT is charged and shown, recovery is usually still blocked if the car is available for private use.
Limitations and eligibility
- Age-at-end-of-term and mileage limits vary by funder.
- Private sales may not be acceptable to all funders.
- Older cars may need a larger deposit.
Map out your options in five steps
Educational comparison, no obligation to enquire.
Frequently asked questions
Is benefit in kind lower on a used company car?+
Not usually. It is generally based on the original list price, not the used price paid.
Can I reclaim VAT on a used company car?+
Rarely. Margin scheme cars have no reclaimable VAT, and where VAT is charged it is usually blocked if the car is available privately.
How old can a used car be?+
It depends on the funder. Many set a maximum age at the end of the agreement, so term and vehicle age are linked.
Related reading
Sources
This guide is general information and not tax, legal or accounting advice. Sorbus Finance is a credit broker, not a lender. Finance is subject to status and lender criteria. Review your position with your accountant.