lease options for cars
Business Contract Hire (CH) and lease options for cars – usership not ownership lease options for cars
Contract Hire is available to Limited Companies, Sole Traders or Partnerships and offers the company fixed monthly budgeting with minimal outlay.
It is an extremely tax effective method of funding a business vehicle as the rentals may be offset against your taxable profits and lease options for cars.
Additionally, if you are a VAT registered business 100% of the VAT on the monthly rentals may be reclaimed where the vehicle is either a van or a car used soley for business purposes. Where the vehicle is used for business and private mileage only 50% of VAT on rentals is recovered.
Benefits of lease options for cars lease options for cars
- Fixed cost allowing easy budget management
- Low initial outlay (usually 3 rentals in advance)
- Supplier arranges delivery and collection of vehicle
- No responsibility of vehicle disposal
- This form of funding is considered to be ‘off balance sheet’ and the vehicle will not be shown as an asset within your balance sheet
- VAT registered business can reclaim 50% of the VAT on the contract and 100% of the VAT on any maintenance element
- No depreciation risk lease options for cars
- Finance company carries Residual Value Risklease options for cars
- Ability to change for a brand new vehicle on a regular basis
Business Contract Purchase lease options for cars (CP) – ownership
Contract Purchase offers the company accurate monthly budgeting and cash flow, minimal capital expenditure, ownership of the asset and fixed interest ratelease options for cars .
The difference between Contract Purchase and Contract Hire scheme is that there is a guaranteed option to buy the vehicle at the end of the contract by paying a ‘balloon payment’ (sometimes referred to as the GFMV or Guaranteed Future Minimum Value).
Contract Purchase is most advantageous for companies considering prestige vehicles, where the purchase price at the end of the contract may be less than the re-sale value of the vehicle, therefore enabling the company to re-coup some of the capital outlay of the contract lease options for cars .
Benefits
- Fixed cost allowing easy budge management
- Low initial outlay (usually 3 rentals in advance)
- The choice to buy, sell or trade in the vehicle at the end of the contract
- Efficient solution for businesses unable to reclaim VAT
- Interest charges claimable against tax
- Rentals allowable against tax
- No depreciation risk
- No responsibility for vehicle disposal if returning the vehicle
- Finance company carries the Residual Value Risk
- lease options for cars
Personal Contract Hire lease options for cars (PCH) – usership not ownership
Specifically designed for the private motorist. This form of funding allows you to run your own car on a similar basis as a company car without having to pay tax on the benefit. Unlike many company car schemes you are not restricted in your choice of vehicle.lease options for cars
Benefits
- Fixed cost allowing easy budget management
- Low initial outlay (usually 3 rentals in advance)
- Supplier arranges delivery and collection of the vehicle
- Ability to change for a brand new vehicle on a regular basis
- No depreciation risk
- No responsibility for vehicle disposal if returning the vehicle
- Finance company carries the Residual Value Risk
Personal Contract Purchase (PCP) – ownership This contract is designed again for the private motorist. This method of funding allows you to run your own car on a similar basis as a company car without having to pay tax on the benefit.lease options for cars
You enjoy the pleasure of driving a new vehicle every 2-4 years. The option of owning or returning the vehicle is open until the end of contract.
The finances are structured so that you do not need a large deposit and the guaranteed Residual Value eliminates the risk of depreciation and keeps the monthly repayments low.
Benefits
- Fixed cost allowing easy budget management
- Low initial outlay (usually 3 rentals in advance)
- The choice to buy, sell or trade in the vehicle at the end of the contract
- Charges are exempt from VAT
- Ideal for opting out of the company car scheme (no company car tax)
- Ability to change for a brand new vehicle on a regular basis
Finance Lease (FL) – usership not ownership Finance Lease offers the company accurate monthly budgeting and cash flow, minimum capital expenditure and a fixed interest rate, this method of funding provides an alternative solution to contract hire.
Although your business will never actually own the vehicle, Finance Leasing makes many of the benefits associated with ownership available to your business, whilst at the same time offering significant tax advantages. lease options for cars
For the duration of a Finance Lease agreement the vehicle will be shown as a leased asset within your balance sheet. Rentals are treated as a revenue expense and may be offset against your taxable profits. Furthermore, rentals can be tailored to match the cash flow of your business with a ‘balloon’ rental being used to defer part of the vehicles initial cost. lease options for cars
lease options for cars
If your business is registered for VAT, 100% of the VAT payable on the finance rentals may be recovered where the vehicle is either a van, or a car used solely for business purposes. If the vehicle is a car used for business and private mileage, then only 50% of the VAT is reclaimable.
At the end of the agreed period the vehicle is sold and the proceeds are used to clear any ‘balloon’ payment. If the sale proceeds do not cover this amount then the shortfall must be made up by the lessee. Should the proceeds exceed the ‘balloon’ then the difference will be refunded as a rebate of rentals lease options for cars .
Benefits
- Rental pattern tailored to suit the cash flow needs of your business and a ‘balloon rental’ will typically be agreed between the lessee and Central (UK) Vehicle Leasing Ltd
- Low initial outlay (usually 3 rentals in advance)
- No mileage penalties
- Can be done as a business or as an individual
- Vehicle shown as balance sheet asset
- Rentals are allowable against tax
- VAT registered businesses can reclaim all, or some of the VAT payable on the finance elemement of the rentals lease options for cars
Hire Purchase / Lease Purchase (HP/LP) – ownership Everyone is familiar withe the traditional vehicle finance of Hire Purchase where upon the last payment you will acquire title of the vehicle. lease options for cars
Lease Purchase is very similar to Hire Purchase but has a deferred (balloon) payment at the end of the contract lease options for cars.
This is a non VAT product and there are no mileage penalties. This is an ideal funding option if a company is not VAT registered lease options for cars. Benefits
- No mileage lease options for cars penalty
- lease options for cars
- Changes are exempt from VAT
- Tax reduce – reduces tax bill
- Can be done as a business or as an individual
- Capital release – leaves money available to develop other parts of the business
- Vehicle is seen as a balance sheet asset
- Interest charges allowable against taxable profit – reduces tax bill
- Ownership of the vehicle – control of usage and disposal lease options for cars
lease options for cars