0161 406 3936

What is Business Contract Hire (BCH)?

What is Business Contract Hire (BCH)?
4th December 2019
What is Business Contract Hire (BCH)?

What it is? A long-term rental agreement (sometimes known as an ‘operating lease’)

Who is it popular with? VAT-registered companies.

How long does it last? 24 to 60 months, depending on business requirements

Is it available with maintenance? Yes

Additional points:

The contract hire company reclaims the VAT on the original purchase, so they can reduce your monthly rentals (these include VAT).

VAT-registered companies can claim back 50% of the VAT (blocked VAT) on the finance element for cars and generally 100% for commercials (as long as there is no private use or exempt turnover and they are not on the Flat Rate VAT Scheme).

On contracts with maintenance, the VAT on the service element is 100% recoverable.

Road fund licence is provided for the full term of the contract.

If you opt for a maintenance package, you are helping to fix your companies monthly expenditure and save time managing your fleet.

Often manufacturers use this type of finance to promote special offer deals, the cash price of the vehicle is not disclosed so it has less effect on used car values.  

One of the major benefits is that there are no disposal worries, as the future value is underwritten by the leasing company.

If the vehicle exceeds the contract mileage an excess mileage charge will apply. Early termination charges may apply if you end the contract before the formal end date.

It is your responsibility to maintain the vehicle in accordance with the manufacturer guidelines, additional maintenance packages are available.

This is a hire product so you will not own the vehicle.

You will be liable to pay for any excess damage that is on the vehicle at the end of contract that is outside of the BVRLA Fair Wear and Tear Guidelines.

VIEW Our latest business contract hire special offers here