Concept Vehicle Leasing

Business Contract Hire (BCH) - How Does it Work?

Why tie up your earnings in a depreciating asset that will only cost you time and money. Instead, why not improve your cash flow and gain some piece of mind by trying vehicle leasing for your business?

At Concept Vehicle Leasing we can provide Contract Hire, Finance Lease and Contract Purchase from a range of lenders. Not sure what any of these are, no problem, give us a call on 0800 043 2050 and well explain it all in black, white or orange for you.

Easy straight forward vehicle leasing

Business Contract Hire is the most common form of Business Lease.  You commit to leasing a new car or van for a fixed amount of time, making 

monthly rental payments as you go.  At the end of the agreement you simply return the vehicle to the leasing company and take advantage of a new lease deal.  Contract Hire is effectively a long term rental and you will not own the contract car or van.

The rentals are calculated based on what the vehicle leasing company buys the vehicle for at the start of your contract, and what they expect it will be worth when you return it at the end, this is known as the residual value. The difference between the original purchase price and the residual value is the vehicles depreciation.

Business contract hire benefits

  • No Depreciation - No risk on the vehicles future value
  • Easy Disposal - Simply return the vehicle in the end
  • Cashflow - Low initial rental and fixed monthly rentals

VAT registered? If so, you can recover 100% VAT on the monthly lease rental when you lease a new van. For contract hire and leasing of cars, there is a 50% restriction if you use the car for personal use - so generally you can recover 50% VAT on a car lease.

Tax Relief - Incorporated businesses can offset up to 100% of lease rentals against Corporation Tax.

Business contract hire limitations

  • No Ownership - The leasing company will retain ownership of the vehicle.
  • Fixed-term Agreement - You are likely to incur costs for early termination of the lease.
  • Fair Wear & Tear - You are likely to be charged if the vehicle suffers damage outside of BVRLA Fair Wear & Tear standards.
  • Benefit in Kind Tax - If your vehicle is for private use through the business, then employees and Directors are liable for Benefit in Kind tax.
  • Mileage - If you exceed your contract mileage you could incur charges. It's is possible to re-schedule mileage part way through the lease.
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