Personal Contract Hire (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. PCH allows you to use a car for a set period of time at a fixed monthly price.

Is PCH subject to VAT?

Yes, VAT is charged and included within all the payments but is un-claimable by the individual.

As a PCH customer, what payment options do I have?

In the leasing industry the “normal” payment profile is 3 initial rentals in advance. A higher initial payment will bring the monthly payment down and a lower initial payment will higher the monthly payment.

Examples of initial payment.
If a customer takes out a lease on a BMW based on a 3+35 payment profile at £350 including vat per month the total payment at the end of the lease will be £13,300 (38 x £350). Some different initial payment profiles based on this example are as follows:

1. 3 Initial payments

  • Initial payment is 3 x £350 = £1050
  • Monthly payment is 35 x £350
  • Total payment is 38 (3+35) x £350 = £13,300

2. Initial payment of £2,000 + vat – for customers who want a lower monthly payment

  • Initial payment is £2,000
  • Monthly payment is £322.86 (£13,300 – £2,000 / 35)
  • Total payment is £2000 + (35 x £322.86) = £13,300

3. 1 initial payment – for customers who want to have a lower initial rental

  • Initial payment is 1 x £350 = £350
  • Monthly payment is £370.00 (£13,300 – £350 / 35)
  • Total payment is £350 + (36 x £370) = £13,300

Please note that the above examples are just for illustration purposes and to be used as a guideline – please obtain a written quote for all different payment profiles that you require.

Benefits of Business Contract Hire

  • Fixed cost allowing easy budget management
  • Low initial outlay (usually 3 rentals in advance)
  • Supplier arranges delivery and collect 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 (market value of the vehicle at the end of the lease