Contract hire & PCP

[ppottersfarm]

Looking at a new car for the other half and we normally lease through the business and claim half the vat back on the monthly payments as its used for business use 50% of the time.
However PCP looks more attractive having been to a few garages this morning but can you claim half the vat back on a PCP? If on a PCP the payments would come out of the business anyway.
Clearly I’ll ask the accountant but I cant till monday. Cheers in advance.

 

[Still Farming]

Their'll do anything to sell you a car.
Buying is easy bit ,paying and end game is the hard bit down the road.

 

[feilding]

Put on HP. My accountant always says never on lease or PCP. On HP the vehicle is yours at end of payments.
To do whatever you want with it. Keep or trade in.

 

[Still Farming]

Put on HP. My accountant always says never on lease or PCP. On HP the vehicle is yours at end of payments.
To do whatever you want with it. Keep or trade in.

Dearer then is it possibly??

 

[feilding]

Dearer then is it possibly??

But it's yours. Lease or PCP it's never yours. Isn't the tax relief better on HP. Used to be.

 

[Gedd]

Dearer then is it possibly??

In the short term yes but as he says after the finance period its yours pcp they want you to take anotger pcp deal you end up with nothing eventually

 

[Still Farming]

In the short term yes but as he says after the finance period its yours pcp they want you to take anotger pcp deal you end up with nothing eventually

Yes, residual value what they offer you and settlement figures, and excess mileage money :NOT NICE.
They never sell nothing if it wasn't for this continual schemes.

 

[Still Farming]

But it's yours. Lease or PCP it's never yours. Isn't the tax relief better on HP. Used to be.

But does anyone want them in the end?
They pay one figure and 3 yrs warranty and often service plans plus breakdown.
They get addictive??

 

[warksfarmer]

Put on HP. My accountant always says never on lease or PCP. On HP the vehicle is yours at end of payments.
To do whatever you want with it. Keep or trade in.

Done the sums hundreds of times and if your into changing vehicles as warranty expires theres very little difference between contract hire and purchasing, so why purchase and take the risk on the residual to then be kicked in the gonads by the dealer when trading or something like covid happening and the car market collapsing over night. If it wasnt for furlow and government grants there wouldnt be a uk car market today.

If you keep cars longer than warranty periods which tend to be 3 years then buy.

The caveat presently is that is becoming harder to lease a diesel due to manufacturers withholding diesels from the uk market so they can force electric into the market to hit government targets and not get fined. The fines are £15,000 per elec car NOT sold. So somebody like Nissan for example under sell by 50,000 elec cars in one year will have a fine of £750 million.

 

[Still Farming]

Go abroad and buy a diesel?
What damage in costs to drive one back these days??

 

[J 1177]

In the short term yes but as he says after the finance period its yours pcp they want you to take anotger pcp deal you end up with nothing eventually

Yep bought my pickup on hp, paid for over three years, iv had another 6 years cheap motoring (touch wood) since. A set of tyres and breaks is all shes cost me in repairs so far.

 

[David.]

PcP is just rent-a-car isn't it?

 

[Johnnyboxer]

Looking at a new car for the other half and we normally lease through the business and claim half the vat back on the monthly payments as its used for business use 50% of the time.
However PCP looks more attractive having been to a few garages this morning but can you claim half the vat back on a PCP? If on a PCP the payments would come out of the business anyway.
Clearly I’ll ask the accountant but I cant till monday. Cheers in advance.

No it won’t work doing it on HP or PCP (which is just HP with a balloon & nothing fancy)
You can only claim back 50% of the Vat on a private car, via a LEASE (on the 50% business use portion)
HMRC rules are Lease only
Not cash
Not cheque
Not bank transfer
Not HP
Not PCP
Those are the rules

 

[Wombat]

PcP is just rent-a-car isn't it?

to a point but depends on your circumstance, the company I work for state my car cannot be over 3 yrs old if I take the car monetary allowance, so it works for me

 

[mf7480]

No it won’t work doing it on HP or PCP (which is just HP with a balloon & nothing fancy)
You can only claim back 50% of the Vat on a private car, via a LEASE (on the 50% business use portion)
HMRC rules are Lease only
Not cash
Not cheque
Not bank transfer
Not HP
Not PCP
Those are the rules

Does that follow that 50% of the lease is fully tax deductible too?

 

[Johnnyboxer]

Does that follow that 50% of the lease is fully tax deductible too?

I don’t think so
It’s governed by the personal car write down allowance schedule for the business use proportion ……I think
But I am not an accountant-so best check up with the latest car allowance guidelines

More info here

Motoring expenses (VAT Notice 700/64)

How to account for VAT on vehicles and fuel you use for your business.

www.gov.uk