If you're thinking of leasing a 'company' or business car then you need to be aware that the tax relief your business gets can be restricted. There are two restrictions in place, one for VAT and one for business tax relief. The first restriction applies to Value Added Tax ('VAT'). For leased passenger cars, only 50% of the VAT on the lease rental is recoverable, even for VAT registered organisations that would normally be able to recover all of the VAT on business costs. The 50% restriction on VAT recovery applies to all passenger cars with the exception of those used wholly for business purposes. Effectively this means that typical company cars are subject to the 50% restriction; only 'pool cars' which are never used for private motoring are not subject to the restriction. But there's a double whammy, as you'll see below.