| Personal Contract Hire | Business Contract Hire |
|---|---|
| Available for personal customers. It is not available to corporate entities, e.g. limited companies, PLCs or limited partnerships. | Only available to corporate entities, e.g. limited companies, PLCs or limited partnerships. The vehicle can be used for both business and private use. |
| Monthly payments are fixed and depend on the vehicle’s depreciation, lease term and mileage. | Monthly payments are generally lower than PCH. This is because some businesses can reclaim VAT. |
| You cannot reclaim VAT on PCH agreements. | Businesses can reclaim 50% of the VAT on the monthly payments if the vehicle is used for both business and private use. If the vehicle is used only for business, 100% of the VAT can be reclaimed. Corporation Tax: Monthly payments are typically tax-deductible as a business expense, reducing the company’s taxable profit. Benefit-in-Kind (BIK) Tax: If the vehicle is available for personal use by an employee, it is subject to BIK tax, which is calculated based on the car’s value, CO2 emissions, and the employee’s income tax band. |
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