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Tractor contract hire/leasing
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<blockquote data-quote="holthallfarm" data-source="post: 671551" data-attributes="member: 1854"><p>We have just done this exercise with a new 4wd. We got PCP figures for a 4 month old demonstrator that was on the forecourt for £42,500 (obviously no vat involved). In round figures they wanted £3500 up front which includes the road tax at £180. Then it was 48 monthly payments of £550 with a balloon payment at the end of £17,000. You can pay that and own the car, hand it back and walk away or use any equity in the car as the deposit for the next one. We would get capital allowance in year one of the full £42,500 but obviously cannot claim any vat back.</p><p>The lease deal of exactly the same vehicle but obviously brand new though (£50,500 value) was £2900 + Vat deposit, then 35 payments of £485 + Vat. </p><p>Having shown the accountant both figures and looking at our business accounts we can claim 50% of the vat back and put 50% of the lease costs against tax meaning that the lease vehicle will cost us about £22,000 over the 3 year lease whilst the PCP one will cost us about £23,000 over the same period of 36 months. But the PCP vehicle then has another year to run out of warranty whilst the leased vehicle is handed back at 3 years old when the warranty runs out. Then on top of leased £22,000 we can put half that cost against tax so really if your a tax payer then we might as well have a nice car out of it instead of handing it to the government.</p></blockquote><p></p>
[QUOTE="holthallfarm, post: 671551, member: 1854"] We have just done this exercise with a new 4wd. We got PCP figures for a 4 month old demonstrator that was on the forecourt for £42,500 (obviously no vat involved). In round figures they wanted £3500 up front which includes the road tax at £180. Then it was 48 monthly payments of £550 with a balloon payment at the end of £17,000. You can pay that and own the car, hand it back and walk away or use any equity in the car as the deposit for the next one. We would get capital allowance in year one of the full £42,500 but obviously cannot claim any vat back. The lease deal of exactly the same vehicle but obviously brand new though (£50,500 value) was £2900 + Vat deposit, then 35 payments of £485 + Vat. Having shown the accountant both figures and looking at our business accounts we can claim 50% of the vat back and put 50% of the lease costs against tax meaning that the lease vehicle will cost us about £22,000 over the 3 year lease whilst the PCP one will cost us about £23,000 over the same period of 36 months. But the PCP vehicle then has another year to run out of warranty whilst the leased vehicle is handed back at 3 years old when the warranty runs out. Then on top of leased £22,000 we can put half that cost against tax so really if your a tax payer then we might as well have a nice car out of it instead of handing it to the government. [/QUOTE]
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