Business Vehicle Leasing Deals
A business vehicle lease is commonly referred to as Business Contract Hire (BCH) and allows businesses a fixed payment method for the use of a car or van for a term of normally between 12-48 months. You'll be required to pay an initial rental and will then make fixed monthly payments thereafter for the duration of that term. At the end of the lease, the vehicle/s will be returned.
You can lease a vehicle under a Business Contract Hire agreement if your company is either: a Limited Liability Partnership (LLP), a Limited Company, a Partnership or you are a Sole Trader. The business will need to pass a credit check and demonstrate sufficient income or profit. You will therefore be required to submit details of the business and the name and home addresses of the business director/s, owner/s or proprietor/s. Evidence of your company's accounts will then be reviewed to determine affordability: 3 - 6 months' business bank statements is usually sufficient for this purpose.
The difference between a business lease and a personal one lies only in how the price is advertised: prices for a Business Contract Hire agreement (BCH) will exclude VAT while a Personal Contract Hire agreement (PCH) will include VAT. This is because businesses are able to claim back a proportion of the VAT on the payments of their lease vehicle and this is not the case for personal vehicles.
For business leases used for business use only, 100% of the VAT applicable to the finance payment is reclaimable. This reduces to 50% if the vehicle is used for personal as well as business use. 100% of the VAT for any maintenance payment is also reclaimable. The rental payments are also classed as a true business expense so can be wholly offset against corporation tax.