Business Contract Hire

A highly cost effective and budgetable agreement.

Business Contract Hire or Business Lease is a lease contract which can range from a contract length of 28 days to 60 months and can be tailored to suit all businesses.


  • No need for any large cash outlays
  • Enables a fixed monthly cost to be budgeted for
  • Limits external cash flow
  • Monthly costs can generally be allowed against any profits a business may make. Vehicle models which have a CO2 figure over the 130g/km will be subjected to a 15% dis allowance on the portion of rental to be claimed against a businesses tax amounts. For contract hire or leased vehicles with a CO2 figure of 130g/km or below, there is currently no dis allowance.
  • Lower administration costs and time
  • Fully included Road Tax for the contract or lease duration – auto issue
  • Maintenance packages can be included for all servicing, maintenance and / or tyres
  • Inclusive breakdown cover
  • Relief vehicles


  • Cancellation penalties can be high if termination is required
  • Contracts or Leases are based on pre-agreed mileage limits if these are exceeded additional costs may be charged.
  • Vehicles must be looked after and any damage found on vehicle return – over and above fair wear and tear guidelines may be charged for.
  • There is no option to directly purchase the vehicle at the end of the contract.

Additional advice on Business Contract Hire:

The owner of the vehicle (contract hire company) owns the vehicle as a business asset and can claim VAT back on the purchase and then passes rentals to you which are also subject to VAT. Contract Hire and Business leasing are popular with VAT registered businesses as they can mostly claim up to 50% of the hire cost of the vehicle back and 100% of the maintenance element on motor cars. On Commercial vehicles the figure is usually 100% depending on any private usage and VAT scheme.

With Contract Hire or Vehicle leasing is that rentals are fixed as the disposal price has been pre-agreed and not the responsibility of the customer. Contract Hire or Leasing is usually categorised as ‘off balance sheet funding’ (subject to legislation change) meaning it usually does not affect your companies gearing.

Finance Lease

Finance Lease is usually used on commercial vehicles and vans when Contract Leasing / Hire is not suitable.

Similar to Contract Hire you pay a regular monthly rental. The amount of rental is decided by the purchase price of the vehicle and the pre-agreed disposal/ residual amount of the vehicle at the contract end after interest and depreciation amounts.


  • Low Capital outlays
  • Fixed monthly levels of expenditure
  • Vehicles are disposed of by the customer so no reconditioning charges are applicable
  • As with contract hire 50% of VAT on cars and 100% on commercial vehicles is reclaimable.
  • Fully inclusive service, maintenance and tyre packs can be added to the agreement


  • You can never directly own the vehicle at the end of the agreement as it must be disposed of by you to a 3rd party
  • On some contracts the interest rates can be variable

Additional Information on Finance Lease:

Although never the titled owner, at the end of the agreement you are responsible for a payment equivalent to the pre agreed residual value of the vehicle. Any profit or loss associated with this disposal is your responsibility.

Many finance lease agreements can offer a variety of payment options to suit any budgets. The regular monthly payment can be lowered further with an enhanced deposit or an end of contract balloon payment. Alternatively you can choose to pay the full cost of the lease off over a fixed period of time.

Business Contract Purchase

Contract Purchase (CP) is an alternative type of agreement avoiding any depreciation risks

Regular monthly payments are not subject to any VAT amounts, however if Service packs are taken these may attract a VAT element.


  • Initial payments can be tailored to suit budgets
  • Regular fixed monthly payments for the contract duration
  • Choice of options at the end of the contract
  • Service, Maintenance and Tyre packs can be added if required
  • End Balloon rental is agreed at the outset


  • End of contract decisions can be confusing

More Information on Business Contract Purchase:

Contract Purchase is ideal if you would like an option to purchase at the contract end. Contract Purchase agreements involve an initial payment then fixed rentals for the remainder of the agreement until the O.F.P (Optional Final Payment) at the end at the end of the contract which can also be described as the G.F.V (Guaranteed Future Value).

There is an option to enable a trade in with the Contract Purchase scheme, this trade in value can usually be used as a deposit amount or many dealerships may offer a direct purchase scheme.

Lease purchase

Lease Purchase ideal for people who like to own their vehicle but do not wish to buy immediately

Lease Purchase suits non VAT registered companies and individuals who would also like the opportunity to eventually own the vehicle.


  • Minimum deposit amounts required
  • Pre defined mileage limits
  • Perfect for None VAT registered individuals looking to take ownership
  • Accurate budgeting with ownership being enabled once the full balloon figure is settled
  • Regular payments not attributable to VAT
  • The vehicle will become a company balance sheet asset and can go against taxable profit amounts


  • Balloon payments at the contract end must be paid
  • Ownership takes place once balloon has been settled – balloon figures may be higher than actual value
  • Funding option only and doesn’t include any service, maintenance or tyre packages

Additional Information on Lease Purchase:

Very flexible agreement there is possibility to place large initial deposits in order to lower ongoing monthly commitments. The regular monthly rental is calculated by subtracting the initial agreed retail sales value and the end of contract residual value plus interest charges. Often this agreement is chosen on vehicles with high residual values.

On a lease purchase you HAVE to purchase the vehicle at the contract end whereas in a Contract Purchase agreement you still have the option to purchase at the end of the agreement

Lease Purchase is only right for people who definitely wish to own the vehicle – contracts usually last between 2-5 years in length but contracts can be settled at any point during the agreement.

Personal Contract Hire

Personal Contract Hire or Personal Leasing is basically Contract Hire but in a personal name.

Operates for a pre determined fixed period of time with a fixed monthly rental.


  • Variable Initial payment tailored to suit budgets (usually 3,6,9,12 payments)
  • Pre defined contract length
  • Contracted mileage amounts
  • Highly budgetable fixed cost agreements
  • Monthly amounts cover usage of vehicle
  • Fully maintained contracts available covering all servicing, maintenance and tyres
  • No end of contract disposal risks
  • Road tax included and auto issued for duration of contract


  • No option to purchase at the end of the agreement
  • In contract termination costs can be high and hard to predict.
  • You never have the option to directly purchase the vehicle

More Information on Personal Contract Hire:

The contract removes the disposal risk and hassle from the individual. Most contracts can be formally and informally extended past the end of contract date.

Personal Contract Hire is essentially very similar to business Contract Hire as both are based on a contracted annual mileage. Ideally you will be able to accurately predict or restrict the amount of mileage you do each year so that accurate contracts and quotes can be generated.

If you exceed the total contracted mileage you will be liable to excess mileage charges, these vary with different finance company’s although all figures will be detailed at the outset.

For total piece of mind within the contracts we always advise a fully maintained contract which will cover all servicing, all maintenance and all Tyre replacements for the full contract duration.

The vehicle must be fully insured by the person who is named on the contract. Vehicles must also be returned in a condition which is commensurate with the age and mileage of the vehicle.

Personal Contract Purchase

Personal Contract Purchase (PCP) is for personal customers and can be used for both new and used vehicles

The regular monthly payments are not subject to VAT, however additional services may attract the VAT amount.


  • Initial deposits and payments can be tailored to suit customer.
  • Monthly payments are fixed for the contract duration
  • The final payment / balloon rental can be refinance if required
  • Variety of options at the end of the agreement.
  • Fully maintained agreements are available (usually excluding tyres)
  • Final Balloon or Guaranteed Future value is set at the start of the agreement
  • Finance product can be used on both New and Used vehicles


  • Can be confusing at the end of the agreements
  • You must have fully comprehensive vehicle insurance

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