This plan offers a straightforward, effective method of funding for businesses where ownership is a priority. After paying an initial deposit, the balance of capital and interest is paid by fixed monthly rentals over an agreed period. A typical agreement period can be from 1 to 4 years and when all rentals have been made, including an option to purchase fee, you become the owner of the vehicle. All interest charges are allowable against the taxable profits of your business.

Your scheduled monthly rentals are not subject to VAT and the vehicle will be classified as an asset and displayed on your balance sheet. All vehicles funded in this manner are eligible for writing-down allowances which can be offset against taxable profits generated.

Our lease purchase plan is similar to hire purchase but offers greater flexibility. It provides the same tax and financial benefits as hire purchase, but rentals can be structured to suit your business's particular cash flow situation. If you would like to remove a sizeable percentage of the original cost of the vehicle from the regular rental schedule, you can incorporate a deferred final, or 'balloon' rental at the end of the plan.

A balloon rental is a final lump sum based on the estimated residual value of the car at the end of the agreement and it can offer significant cash flow advantages through lower monthly rentals than our conventional hire purchase contract.

Essentially an operating lease, contract hire can include the vehicle of your choice, servicing and maintenance, a relief vehicle, breakdown and recovery road fund license and vehicle collection and disposal. The only additional costs will be insurance, petrol and oil which means from the start of the agreement you'll know exactly how much your vehicle will cost to run each month. Unexpected bills will be a thing of the past and less time will be spent on administration because you'll receive just one invoice a month covering all aspects of the agreement.

Like an operating lease the vehicle will not be displayed on your balance sheet. As with leasing, if you are VAT registered you may be able to reclaim 50% of the VAT on the rentals, or 100% of the finance element of the rental if the car is used exclusively for business purposes. The maintenance element of the rental is detailed separately in the invoice and may be recovered in full.

If you don't want the eventual ownership of a vehicle but require the full use of one for a minimal outlay, plus any relevant tax benefits, then consider leasing. This provides many organisations with a cost effective way of acquiring vehicles. Leasing can provide many of the benefits associated with ownership, together with potential tax advantages for your business. Rentals can also be tailored to match your business cash flow, for example with a balloon rental, which defers a final rental to reflect the projected sale value of the car.

Throughout the course of the agreement the vehicle is displayed as a leased asset on the balance sheet. All, or part of the rentals, (depending on manufacturer list price) are treated as a revenue expense and may be offset against taxable profits. If you are VAT registered and the vehicle is used privately, 50% of the VAT payable on the rentals may be reclaimed. If the vehicle is used exclusively for business purposes, 100% of the VAT may be reclaimed.

At the end of the lease when the vehicle is sold, the sale proceeds less a nominal sum, will be refunded to you as a rebate of rentals. This rebate may attract VAT, but if you have only been able to reclaim 50% of the VAT payable during the agreement, only 50% of the VAT on the rebate will need to be paid back to HM Customs & Excise.