IVC - Contract Hire, Business and Personal.
A new vehicle for a fixed monthly outlay with no unexpected bills.
A new vehicle every year, every 2 years, or every 3 years.
In essence these are some of the benefits of vehicle contract hire. If you are comfortable with never 'owning' the vehicle then this is a very viable alternative that offers many financial benefits*. The 'contract' can be for any length of time, typically 1 to 3 years, the longer the contract the (typically) smaller the monthly outlay. IVC are not into a Ferrari for the weekend.
At the end of the contract essentially you have 3 options - the first is to simply walk away, the second is to carry on with another new vehicle, and the third is to extend the agreement.
Other benefits are a low initial outlay - typically the equivalent of 3 months' payments. The payments are also fixed and subject to Vat. Essentially if you are VAT registered you may reclaim 50% of the VTA 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 fully VAT recoverable irrespective of the use of the vehicle.
The payments are offset against taxable profits. This improves your cash flow and tax position. Similar to an Operating Lease, the vehicle will not be diplayed on your balance sheet.
There is another form of vehicle lease that allows you to own the vehicle at the end of the term, it is called lease purchase. More on this...
*Please, please, always listen to advice from your accountant before entering financial transactions.
