Business Contract Hire (BCH) is a fixed term, fixed mileage rental agreement providing fixed cost motoring with no depreciation risk. There's the option to add a fixed cost maintenance package covering all servicing, maintenance, tyres & roadside assistance. Simply return the vehicle at the end of the contract.
VAT is payable on the monthly rental - 50% of the VAT on the Finance element can be reclaimed for a car or 100% for a Commercial vehicle.
If a maintenance option is taken, 100% of the VAT on the Maintenance element is reclaimable.*
Rentals paid on a BCH agreement are tax allowable.
*VAT reclaim assumes standard VAT registration - any registration variance may be subject to different criteria.
Advantages of Business Contract Hire
- No buying/disposal concerns as you simply return the vehicle at the end of the contract.
- Fixed term contract (2 to 5 years).
- Pre-agreed contract mileage.
- Easy budgeting.
- No depreciation risk.
- No capital expenditure.
- Free UK delivery.
- Flexible initial rental payment & flexible payment profiles.
- Option to include maintenance & servicing.
- Road fund licence included for the full term of the contract.
Points to consider
- There is no option to purchase or own the vehicle at any time.
- Early termination can be expensive, the cost is at the funder's discretion.
- An excess mileage charge will be payable in the event of the contract mileage being exceeded.
- Damage recharges may be applied if the vehicle is not returned in an acceptable condition (please ask for a copy of the BVRLA Fair Wear & Tear Guide).
- Vehicle must be serviced and maintained in accordance with the manufacturer's terms.
- Parking, congestion and other fines are rechargeable and may incur additional charges.
Please Note: The information provided is for guidance only and may be subject to change – you should consult your accountant or local tax office to verify your individual circumstances.