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If your small business is currently leasing vehicles on a Personal Contract Hire (PCH) basis, you could be making some tax savings by switching to a Business Contract Hire (BCH). As long as your business is VAT registered, you can claim up to 50% of the vehicle’s lease cost and 100% of the VAT on servicing and maintenance. With Personal Contract Hire, VAT is charged on the monthly lease cost as well as the servicing and maintenance – if you’ve opted for it.
The only difference between the two is the reclamation of the VAT.
BCH and PCH are essentially the same; they both follow an initial payment followed by fixed monthly amounts over a fixed term. You can choose the lease’s duration and the annual mileage allowance with both packages, and maintenance can be added whether it’s business or personal.
During both types of finance, the vehicle must be comprehensively insured. When it comes to the end of the lease, there could be penalty charges if the mileage has been exceeded or there is damage above what would be expected as normal wear and tear.
We work with limited companies with a fleet size of 5 or more vehicles.
It may have been easier to start leasing business vehicles under a PCH arrangement, but switching to a Business Contract Hire scheme makes total sense to save on tax. See how easy business leasing can be with VWFS | Fleet.
More and more customers are leasing their vehicles through us because of our flexible approach to supporting each business and the quality of service across every brand and model we offer.