Keep your working capital working


Our Plain English Guide

Broadly speaking, the various funding methods are designed to reduce costs, assist cash flow and budgets, whilst minimising taxation. The right method for you will very much depend on your circumstances and choice of vehicle. Here's our FAQs.

Hire or Lease PurchaseContract PurchaseFinance LeaseContract HirePersonal Contract HirePersonal Contract Purchase
Will we own the asset in the end?YesOptionalNoNoNoYes
Can capital allowances be made?YesYesNo (1)No (1)N/AN/A
Is rental linked to residual value?NoYesNoYesYesNo
Is the VAT on rental reclaimable?NoNoYesYes (2)NoNo
Are service & maintenance included? (3)NoNoOptionalOptionalOptionalNo
Is there a mileage limit? (4)NoNoNoYesYesNo
Who disposes of the vehicle?YouYouOptionalUsUsYou
Does driver pay benefit-in-kind tax?YesYesYesYes No No
Are the rentals tax deductible?Interest onlyInterest onlyYesYesN/AN/A

Notes:(1) You claim the monthly rentals, rather than the capital cost.

(2) You claim 50% of the finance element and 100% of any maintenance element, 100% on both on commercials.

(3) Maintenance option is there mainly for the convenience of high mileage and large fleet operators who want to budget for everything.

(4) You set the mileage limit and the monthly rental alters accordingly. Mileage can be altered during a contract.