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| Contract Hire | Personal contract Hire | Finance Lease | ||||||||||||
| Contract Hire Overview | PCH Overview | Finance Lease Overview | ||||||||||||
| Benefits | Benefits | Benefits | ||||||||||||
| Tax implications | Tax implications | Tax implications | ||||||||||||
| Contract Hire includes | PCH includes | Finance Lease includes | ||||||||||||
| Contract Hire Agreements | PCH Agreements | Finance Lease Agreements | ||||||||||||
| Used vehicle contract Hire | Used vehicle PCH | Used vehicle Finance Lease | ||||||||||||
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Contract hire offers some tax advantages over other company car funding options. Off balance sheet funding The car leasing company always owns the vehicle, so it will not appear on a company's balance sheet as an asset. This means is that the company's 'gearing' is improved thus allowing the company to borrow capital if required. Contract hire rentals are allowable against taxable profits (commercial vehicles fully, passenger cars proportionally) which means that if you have a vehicle on a contract hire lease you can lessen your tax liabilty. VAT Benefits of contract hire With a contract hire lease the car leasing company claim back the VAT on the purchase price of the new car. This saving is also passed on to the company that lease the vehicle . This is a distinct advantage over buying a car. The monthly rental is split into two elements, financing and maintenance. A VAT registered company can claim back 100% of the VAT on the servicing element of the rental cost and 50% of the finance rental cost. As a company car is deemed as a benefit by the Inland Revenue, Benefit In Kind Tax (BIK) will be payable. The amount payable is based on the cost of the car, its CO2 emission and the drivers personal tax allowance. See (to follow) |
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Car leasing
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