Business Lease vs Personal Lease

You've decided to go ahead with Contract Hire as your best finance option for getting a new car but you're now seeing two different options: BCH and PCH. Check out this guide which helps you decide whether BCH or PCH is the best option for you.

Personal Contract Hire (PCH) and Business Contract Hire (BCH) are the types of car and van leasing that are available. Leasing has a lot of benefits to take advantage of, so it is best to identify which type of leasing suits you.

What Exactly Are PCH and BCH?

PCH is where you hire a car from the finance company for a specific number of years and then hand it back at the end of the contract. You pay an upfront amount and then fixed monthly payments every month after that. BCH works very similarly to PCH. You lease a car for a set time, set price and return it at the end of the agreement. However, BCH is only available to businesses as an option.

The majority of the time, BCH and PCH are available on the same vehicles and lease deals; you just need to change the lease type from Personal to Business or vice versa. However, some deals are only available as either BCH or PCH – although this is rare.

Why Is BCH cheaper than PCH?

On our website, we advertise our business lease deals as “+ VAT” and our lease deals as “including VAT”. This is because as a VAT-registered business, you can claim back up to 50% of the VAT.

Which Contract Hire Should I Choose?

If you are looking to use the vehicle more for personal use, then you will need to choose PCH as your lease type. You can use the car however you like (provided you stick to the contract mileage). If you use your car for occasional business needs, you can claim back some of the cost to cover fuel, depreciation, servicing etc. You will need to keep a strict record of any business mileage you do and you can get up to 45p per mile for the first 10,000 miles and then 20p per mile for any business miles travelled over that number.

If you are a VAT-registered business, your best choice is BCH. As a VAT-registered business, you can claim back 50% of the VAT on your lease payments. It is possible to reclaim 100% of the VAT back but your car will need to be solely used for business purposes and this does not include your commute to and from work. Do bear in mind that if you are going to use your lease vehicle for any heavy-duty work, you need to keep the vehicle in line with BVRLA Fair Wear and Tear guidelines.

Any Questions?

If you have any questions about which contract hire would suit you best, don’t be afraid to get in touch with us. Give us a call at 0345 350 3776, email us at or send us a message on our live chat service.