General Advice For companies and individuals, we discuss a number of factors which should help you to decide whether to lease (contract hire) or to buy.

Companies, particularly VAT registered businesses should find leasing ideal. Most companies can reclaim half the VAT on their leased vehicles, and this generates an automatic advantage compared with buying, as VAT on cars is not generally reclaimable.
Leasing conserves cash flow, and is particularly helpful for younger and expanding companies. It also helps the company because the total ownership costs are easier to quantify and predict.
Because leased or contract hired vehicles use off-balance-sheet financing, they help companies balance sheets to look healthier.

Most individual will not be able to benefit from reclaiming any of the VAT chargeable on the lease, however this does not really penalise them because VAT on the vehicles themselves could not be reclaimed, leaving the individual no worse off. Some contract hire deals are available only to companies, others are open to all, subject to credit status.
Because of greatly increased and punitive tax levels charged on company cars, many companies have encouraged employees to provide their own vehicles, and this is also beneficial to most employees. The company car tax is based on a notional benefit in kind value somewhat arbitrarily and unfairly imposed by the Chancellor and the UK taxation system. In many cases the notional benefit is well in excess of the actual cost incurred, and is partially based on how "green" the vehicle is perceived to be, a sop to the old labour values of taxing those who work hard enough to succeed to appease the lazy indolent masses who prefer to be nannied by our welfare state. But let's not get too political...
All other considerations affect both individuals and companies about equally. We will use the terms lease and contract hire as being interchangeable for brevity, for the time being, although we will discuss the differences elsewhere on this site.

Decisions and Considerations

Car Leasing & Contract Hire

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