This method of funding is ideal for companies who cannot fully reclaim VAT and is particularly suitable for financing the more expensive cars on the fleet.

It was introduced to alleviate the burden of companies who were unable to reclaim the VAT on their monthly payments, and to overcome the cost of the Corporation Tax implication for their cars costing more than £12,000.

The big difference between Contract Purchase and Contract Hire is that you have the opportunity to buy the vehicle at the end of the contact period. You will be faced with paying a ‘Balloon Payment’ at the end of the contract, which makes you the legal owner of the vehicle or alternatively you can return the vehicle to the Finance Company.