Business Contract Hire
This is a simple Operating Lease that can include full maintenance or just the vehicle, servicing and road fund licence. It provides a complete fixed cost motoring package, leaving you free to concentrate on running your business.
Cash Flow Benefits
With a low initial outlay, normally expressed as monthly rentals in advance, followed by fixed monthly payments, you know exactly what your monthly motoring costs will be. Contract Hire may also be classified as "off balance sheet" which may improve the financial ratios in your accounts (gearing).
Tax Implications
As it is an Operating Lease your finance rentals can be offset against taxable profits. If you are VAT registered, you can reclaim 50% of the VAT on the finance element of the rentals if the vehicle is used privately, or 100% if it is used exclusively for business or is a commercial vehicle. What's more, all the VAT on the maintenance element of the rental can be recovered, irrespective of vehicle use.
Who Owns The Vehicle at the End of the Agreement?
At the end of the agreement you may arrange a brand new vehicle to replace your current vehicle, handing the old one back to us. We will arrange for vehicle disposal.
Personal Contract Hire
Personal Contract Hire (PCH) is a product for private individuals leaving a company car scheme or joining a new company that provides a car allowance, instead of a company car. It allows you the opportunity to finance a car using the most popular funding method used by companies.
PCH is available with or without a maintenance package (the maintenance package offering fixed cost motoring with no hidden extras) and is available for new cars or used vehicles up to 15 months old./p>
Who Owns the Vehicle at the End of the Agreement?
You use the car for the designated period and at the end of the term the vehicle must be returned to the finance company and you start a new agreement with the vehicle of your choice.
PCH rates are exactly the same as quoted contract hire rates simply add 15% to the monthly rate (as VAT is not reclaimable for PCH) and PCH is available on all UK supplied cars.
Contract Purchase
This option is similar to Lease Purchase but with even greater flexibility. It is designed to give all the operational benefits of Contract Hire including maintenance, Road Fund Licence and relief vehicle, without the VAT implications of a lease. It therefore appeals to professions and businesses that are not VAT registered, and individuals who wish to opt out of their company car scheme.
Cash Flow Benefits
The initial deposit is normally expressed as monthly payments in advance and is followed by fixed monthly payments; you know exactly what your monthly motoring costs will be.
Tax Implications
The tax and financial benefits are the same as Lease Purchase or Hire Purchase.
Who Owns The Vehicle at the End of the Agreement?
The final balloon payment is a Guaranteed Future Value. You have the option of either taking ownership, disposing of the vehicle yourself (if you wish to take advantage of a profit opportunity) or simply returning the vehicle to the finance company.
Finance Lease
Finance Leasing can be one of the most cost effective options, if you need full use of a vehicle for minimum outlay but do not require final ownership.
Cash Flow Benefits
The rentals can be offset against taxable profits. If you are VAT registered, 100% of the VAT payable on the rentals can be reclaimed for any commercial vehicle or car used exclusively for business purposes. 50% of the VAT can be reclaimed for a car used for both business and private mileage.
Tax Implications
At the end of the lease the vehicle is sold and the sale proceeds (less a nominal sum) are refunded to you as a rebate of rentals, which attract VAT. Due to its low initial outlay, fixed costs throughout the rental period, excellent tax efficiency and flexibility, Finance Lease is favoured by many business users.
Hire Purchase
Hire Purchase is a simple and popular way of purchasing a vehicle, with worthwhile tax advantages for businesses. If ownership is a priority, this is an extremely cost effective method of borrowing.
Cash Flow Benefits
Paying an initial deposit, calculated as a percentage of the total cost this is followed by fixed monthly repayments; which allows you to budget monthly expenditure precisely in advance.
Tax Implications
Business users may claim tax relief on the interest charged. The vehicle is also classified as an asset, which allows it to be written down against taxable profits by 25% or £3000 (maximum per annum).
Who Owns the Vehicle at the End of the Agreement?
At the end of the agreement, which may be from 1 to 5 years, you become the outright owner of the vehicle.
Flexible Lease
Flexible Lease is similar to traditional methods of funding, whereby the total price of the vehicle, including interest and costs, is charged back to the client over an agreed period of time in the form of monthly payments.
However, where flexible lease differs from traditional funding methods, such as bank loans, is the ability to purchase the vehicles for the client cheaper than the retail price.
At the end of the contract, the vehicle has been fully paid for, which means the client does not need to worry about the vehicle mileage.
The vehicle is then transferred back to the Finance Partner and they dispose of it. Alternatively, the client has the option of selling the vehicle to a third party. Any proceeds from the sale are passed back to the client, minus fees. Clients cannot retain the vehicle at the end of the contract.
Benefits
- Useful for clients who require on balance sheet funding.
- Offers increased flexibility as the vehicle can be extended at the end of the term, a year at a time, for an indefinite period.
- Because the payments are fixed, clients can accurately predict their cash flow.
- Flexible Lease is available on cars and commercial vehicles up to 6.5 tonnes.
- Because the full price of the vehicle is funded, at the end of the term it is paid for. Therefore there is no residual value risk and no final balloon payment.
- There are no mileage restrictions or excess mileage charges.
- 50% of the VAT on the finance rentals can normally be claimed on cars assuming the vehicle is used for both private and business purposes.
- 100% of the VAT on the finance rentals can normally be reclaimed for commercial vehicles.
- No balloon payment
- No end of contract recharges for damage
- The vehicle can be extended yearly for an indefinite period known as Peppercorn Rental for a one off fee each year.
- Clients can sell the vehicle to a third party and retain 100% of the sales proceeds or the Finance Partner will resell at auction for the current market value for a fee of £250.
- The client retains 100% of the sales proceeds minus the Finance Partner’s fee.
Note: Currently only available for PLC’s, Limited Compnaies and LLP’s.
Road Fund License is included in the contract for one year.
PCP
Personal Contract Purchase (PCP) is a new product developed to enable individuals to finance their vehicle whilst still retaining some or all of the benefits associated with a company car.
As the agreement is written in your name the normal "benefit in kind tax liability" doesn't apply. This facility can also be offered to those employees not normally entitled to a company car. Low deposit followed by a fixed monthly charge means that is easy to budget for and it is possible to provide all-inclusive maintenance and breakdown packages.
Who Owns the Vehicle at the End of the Agreement?
The vehicle is supplied for a set period of time at a fixed rental. At the end of the agreement the driver may purchase the vehicle by paying the balloon payment (guaranteed future value) or simply return it to the finance company.