Personal vs business car leasing in the UK: which is right for you?

Personal contract hire (PCH) and business contract hire (BCH) are the same product with different paperwork. You pay a fixed monthly rental to use a brand new car for an agreed term and mileage, then hand it back.

The headline difference is VAT. Personal lease prices are quoted including VAT, so the number you see is the number that leaves your bank account. Business lease prices are quoted excluding VAT, and a VAT-registered business can usually reclaim 50% of the VAT on the rentals of a car used for both work and private journeys, or 100% on a van.

Credit is assessed differently too. A personal agreement is underwritten against you as an individual. A business agreement is underwritten against the company, and newer limited companies are often asked for a director's guarantee.

Company car drivers should also weigh benefit-in-kind tax. Fully electric cars sit at a very low BiK rate compared with petrol equivalents, which is why an electric business lease can cost a higher-rate taxpayer far less per month in real terms than the rental alone suggests.

If you are unsure, price both. Send us the model you want and we will quote personal and business side by side, with the tax position spelled out.