Can I offset PCH lease payments against profits?

Have signed up to a Private Contract Hire car deal and not a Business Contract Hire. Sole trader.

Didn't find your answer?

Hi there, 

As a non VAT registered sole trader I have signed up to a PCH deal and 90% of the car's mileage will be business. Can I offset the lease payments (or the business percentage at least) against profits or does it legally have to be a BCH deal as opposed to PCH?

Many thanks

Replies (9)

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By Accountant A
07th Jan 2020 11:32

What does your accountant say?

https://www.accountingweb.co.uk/about-accountingweb

"AccountingWEB.co.uk is the largest independent online community for accounting and finance professionals in the UK"

This isn't a site for camera operators who want free valuable professional advice.

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Replying to Accountant A:
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By [email protected]
07th Jan 2020 11:58

Ah right. Sorry, I didn't realise this was a site only for accountants. It asked me my profession and the industry I worked in when I signed up. Strange. Any way, thanks for taking the time to respond to me. I am in the process of sorting an accountant to source this type of advice but in the meantime was after a quick one off answer to this question. Anyway, thanks again for the response.

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Psycho
By Wilson Philips
07th Jan 2020 12:17

The short answer to your question is yes, you can claim an appropriate portion of the hire costs. Personal or business contract makes no difference.

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Replying to Wilson Philips:
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By Accountant A
07th Jan 2020 12:41

Wilson Philips wrote:

Personal or business contract makes no difference.

Maybe not tax but may make a difference in terms of the legal agreement under which the vehicle is leased.

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Replying to Accountant A:
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By [email protected]
07th Jan 2020 12:57

Thanks for your insight! Much appreciated.

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Replying to Accountant A:
Psycho
By Wilson Philips
07th Jan 2020 12:58

I was only answering the question asked. I do not disagree that the OP should take professional advice on all of the potential implications.

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Replying to Accountant A:
RLI
By lionofludesch
07th Jan 2020 13:32

Accountant A wrote:

Maybe not tax but may make a difference in terms of the legal agreement under which the vehicle is leased.

Agree with this.

Was PCH cheaper than BCH ? You (the OP) may have breached the terms of the lease.

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Replying to lionofludesch:
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By [email protected]
07th Jan 2020 14:03

Same price but they led me to believe that it would be more straightforward as I would have to give more of my accounts to them for a BCH whereas they just do a credit check for a PCH. To be honest they seemed more keen on a PCH and also suggested that VAT was the only difference which as I am not registered wouldn't make a difference.

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Replying to [email protected]:
RLI
By lionofludesch
07th Jan 2020 15:04

kieran_tynan-AT-hotmail.co.uk wrote:

Same price but they led me to believe that it would be more straightforward as I would have to give more of my accounts to them for a BCH whereas they just do a credit check for a PCH. To be honest they seemed more keen on a PCH and also suggested that VAT was the only difference which as I am not registered wouldn't make a difference.

Who are "they" ?

The leasing company with whom you contracted ?

Or some pushy salesman, keen to close the deal ?

Ach, from a legal viewpoint, these things are usually OK provided you keep paying.

Did he explain the VAT difference ? There should be none, of course.

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