Key Information
Once you have decided on the make and model of your new car or van, the next big decision is the most efficient method of funding it. The various different finance packages can seem confusing and even when you have selected the package that best suits your needs, finding a suitable package can be time consuming.
At ecofleet we are committed to helping you do both, whether you are a private individual, or a fleet operator. Our team will offer you advice on the most tax efficient ways to finance your new vehicle; we will provide you with the correct information so that you can make an informed decision that suits your business. In addition to the sound financial advice you will receive form ecofleet, you will also enjoy outstanding service. Whilst we ensure that our team are suitably qualified to discuss finance agreements, we always recommend that after discussing our offer you talk to your account, they will know you and your business better and will assist you in your final decision.
To help you work out which package is the best for you and your business, HM Customs and Excise recognise only two types of funding;
- Purchase agreement – the customer has the right to obtain legal title to the vehicle. (Supply of Goods)
-
Hire agreement – the customer has no option to gain legal title to the goods. (Supply of Services)
Please find below a quick reference matrix to illustrate the comparisons between different funding options. Please use the matrix as a guide for your consideration.
Contract Hire |
Finance Lease |
Contract Purchase |
Hire & Lease Purchase |
Personal Contract Hire |
Personal Contract Purchase |
Outright Purchase |
|
Finance and Tax Issues |
|||||||
Capital allowances available |
No |
Yes |
Yes |
Yes |
No |
No |
Yes |
Consistent and accurate budgeting |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
No |
Fixed interest rates |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
No |
Improves cash flow |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
No |
No depreciation risk |
Yes |
No |
Yes |
No |
Yes |
Yes |
No |
Ownership of vehicle |
No |
No |
Yes |
Yes |
No |
Yes |
Yes |
Rentals allowable against taxable income |
Yes |
Yes |
No |
No |
No |
No |
No |
Requires minimum capital expenditure |
No |
Yes |
Yes |
Yes |
Yes |
Yes |
No |
VAT Chargeable on rentals |
Yes |
Yes |
No |
No |
No |
No |
No |
VAT Recoverable on rentals |
Yes |
Yes |
No |
No |
No |
No |
No |
VAT Recovered on purchase by leasing company |
Yes |
Yes |
No |
No |
Yes |
No |
No |
Vehicle Running Issues |
|||||||
No disposal risk |
Yes |
No |
Yes |
No |
Yes |
Yes |
No |
On-going support and advice |
Yes |
Yes |
Yes |
No |
Yes |
Yes |
No |
Optional breakdown cover |
Yes |
No |
Yes |
No |
Yes |
No |
No |
Optional fixed cost maintenance |
Yes |
No |
Yes |
No |
Yes |
Yes |
No |
Optional relief vehicle |
Yes |
No |
Yes |
No |
No |
No |
No |
Reduced administration costs |
Yes |
Yes |
Yes |
Yes |
Yes |
Yes |
No |
Road fund license included |
Yes |
No |
Yes |
No |
Yes |
Yes |
No |
VAT Reclaimable on running costs |
Yes |
Yes |
Yes |
Yes |
No |
No |
Yes |
All information provided on this site is for guidance only. We recommend that you seek professional advice from your accountant and tax office before making any decisions. eco fleet uk Ltd accepts no legal liability for the information given as it has been provided for illustration only. It is your responsibility to check the validity of this with the relevant authorities.
