BCH: What does it mean?

A rental agreement allowing a business to lease a vehicle for a fixed time without owning it.

BCH: The long answer

Business Contract Hire (BCH) is a car leasing agreement that is specifically designed for businesses in the UK. It allows companies to lease vehicles for a fixed period of time, typically between 2 to 5 years, by paying a monthly rental fee.

Under a BCH agreement, the business does not own the vehicle but instead has the right to use it for the duration of the contract. This means that the company can enjoy the benefits of using a new car without the financial burden of purchasing and owning it outright.

One significant advantage of BCH is that it provides businesses with predictable and manageable costs. The monthly rental fee covers the depreciation of the vehicle, maintenance costs, and road tax. Additionally, businesses can often include additional services such as breakdown cover and vehicle servicing within the agreement, further simplifying their car-related expenses.

Another benefit of BCH is that it allows businesses to easily upgrade their fleet of vehicles. As the contract comes to an end, companies can simply return the leased car and enter into a new BCH agreement for a newer model. This flexibility enables businesses to keep their fleet up-to-date with the latest technology and safety features.

Furthermore, BCH can be a tax-efficient option for businesses. The monthly rental fee is typically considered as an operating expense, making it eligible for tax relief. However, it is important for businesses to consult with their accountants or tax advisors to understand the specific tax implications based on their circumstances.

Overall, Business Contract Hire is a popular choice among UK businesses as it offers flexibility, cost predictability, and the ability to drive new vehicles without the financial commitment of ownership.