Business Car Leasing
Everything you need to know about Business Contract Hire. Tax benefits, VAT savings, and more.
Browse Business DealsWhat is Business Contract Hire?
Business Contract Hire (BCH) is a type of car leasing designed specifically for businesses and self-employed individuals. It works the same as personal leasing - you pay a fixed monthly amount to use a vehicle - but with significant tax advantages.
BCH is available to limited companies, partnerships, LLPs, sole traders, and self-employed individuals. The vehicle can be used by company directors, employees, or as a pool car.
Tax Benefits
Why businesses choose to lease
VAT Recovery
VAT registered businesses can reclaim 50% of the VAT on the lease rental, and 100% on any maintenance package.
Corporation Tax
Lease payments can be offset against taxable profits, reducing your corporation tax bill.
Low BIK on EVs
Electric company cars have BIK rates as low as 2%, making them incredibly tax-efficient.
Understanding BIK Tax
If you or your employees use a company car for personal use, you\'ll pay Benefit in Kind (BIK) tax. The amount depends on the car\'s P11D value and CO2 emissions.
Example BIK Calculation
Electric Car (0g/km CO2)
- P11D Value: £40,000
- BIK Rate: 2%
- Taxable Benefit: £800
- Tax (40% payer): £320/year
Petrol Car (120g/km CO2)
- P11D Value: £40,000
- BIK Rate: 29%
- Taxable Benefit: £11,600
- Tax (40% payer): £4,640/year
*This is a simplified example. Actual BIK depends on specific CO2 emissions and current tax rates.
Who Can Use BCH?
Leasing vs Buying for Business
Advantages of Leasing
- No large capital outlay
- Fixed monthly costs for budgeting
- VAT recovery on rentals
- No depreciation risk
- Always drive new vehicles
- Off balance sheet financing
Considerations
- You don't own the vehicle
- Mileage limits apply
- Wear and tear charges possible
- Early termination fees
- Modifications not allowed
Ready to Lease for Business?
Browse our business lease deals or speak to our experts for tailored advice.