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What is Business Contract Hire

Business Contract Hire (BCH) is a simple and cost effective way to fund any number of vehicles for your business.

It is effectively is a long term rental agreement.  Contracts can range anything from 18 months to 60 months and can be tailored to suit your businesses requirements.  The leasing company reclaims the VAT on the original vehicle purchase price, so you are only charged VAT on the actual rental costs.

Business Contract Hire is a very popular choice for companies that are VAT registered.  These companies can claim back 50% of the VAT on the finance element for cars (with some private use) and generally 100% for commercials (subject to no private use and not being on a flat rate VAT scheme).  For contracts including optional maintenance, the VAT on the maintenance element is 100% recoverable.  

One of the key benefits is no disposal risk, as the future resale value is underwritten by leasing company.  Another key benefit of Business Contract Hire is that it is an "off balance sheet" funding method (subject to legislation changes). This can improve your assets to borrowing ratio and therefore possibly help your potential borrowing ability in the future.



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