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Business car leasing, also known as business contract hire (BCH), is a vehicle financing option designed specifically for companies and business professionals. In this arrangement, a business or an individual operating as a sole trader leases a car for business use over a specified period, typically ranging from two to four years. The monthly lease payments cover the vehicle's depreciation, and at the end of the lease term, the business returns the car without the responsibility of ownership. Business car leasing offers various advantages, including lower upfront costs compared to purchasing a fleet of vehicles outright, potential tax benefits, and the ability to access a new and well-maintained fleet without the burden of vehicle depreciation. Additionally, business leases often provide flexibility in terms of mileage allowances and customization options, allowing companies to tailor the lease agreements to their specific operational needs. Overall, business car leasing is a strategic and cost-effective way for companies to manage their vehicle fleets while maintaining financial flexibility and operational efficiency.

Business car leasing offers several benefits for companies and business professionals:

• Cost Efficiency: Business car leasing typically involves lower upfront costs, allowing businesses to allocate capital to other critical aspects of their operations.
• Tax Benefits: Many regions offer tax deductions on lease payments and potential VAT reclamation, providing businesses with financial advantages.
• Access to New Vehicles: Leasing allows businesses to regularly update their fleet with new, technologically advanced vehicles, ensuring they maintain a modern and efficient fleet.
• Reduced Depreciation Risk: Businesses can return leased vehicles at the end of the term without the concern of resale values, eliminating the risk associated with vehicle depreciation.
• Administrative Ease: Leasing agreements often come with streamlined administrative processes, reducing the administrative burden related to vehicle management, maintenance, and disposal.

There are two types of contract extensions available for car lease deals, which you may be able to make use of reliant upon the finance provider approving it – it’s not always possible. Informal extension – this is a short-term agreement whereby the customer agrees to use the car beyond the contract end date under the same terms and monthly price. An informal extension lasts no longer than six months and is generally used to assist the change from one lease deal to another Formal extension – this is a longer extension (up to twelve months) which allows the customer to continue using the car beyond the contract end date, but new agreement terms are put in place. This includes a ‘modifying agreement’ detailing a new monthly payment, contract length and annual mileage.

In short, yes – you can use your annual allowance to pay for a lease vehicle. Please discuss this directly with the leasing company and they will be able to advise on what the best options are given the vehicle you have chosen.