What is the difference between business contract hire and a finance lease?

The difference between business contract hire and a finance lease is who carries the vehicle’s value at the end. With business contract hire, the funder takes that risk and the vehicle is handed back. With a finance lease, the business takes the risk, usually sells the vehicle at the end and keeps most of the proceeds or covers any shortfall. Business contract hire suits businesses that want fixed costs and no disposal work, while a finance lease suits those that want more control over the vehicle’s end value. VAT is handled differently too, as explained on our business contract hire page. Our article on choosing a finance option for your fleet compares the two with hire purchase and outright purchase. Toomey Leasing Group can quote both options for the same vehicles so you can compare. Request a fleet finance quote.

How do you build a fleet budget?

A fleet budget should be built from the whole life cost of each vehicle: rental or finance payments, fuel or charging, maintenance, insurance, tax and the admin time needed to run it. Comparing vehicles on whole life cost rather than monthly price shows which models are cheapest over the full contract. Fuel or charging is often the largest variable cost, and HMRC’s advisory fuel rates give a starting point for business mileage in company cars. Company car tax and employer National Insurance also vary widely between models. Our whole life cost analysis builds these figures for each vehicle, and our guide to mastering your fleet budget covers forecasting and review. We build a fleet budget from your current vehicles and show where costs could fall. Ask for a fleet budget review.

Are fleet lease payments tax deductible?

Lease payments on business vehicles are generally deductible from taxable profits for corporation tax or income tax. For cars with CO2 emissions over 50g/km, 15% of the rental is disallowed, so electric and other very low-emission cars receive full tax relief on their lease payments. HMRC explains the 15% restriction in its Business Income Manual, and it applies to cars, not vans. VAT on lease rentals is a separate question, covered on our business contract hire page. Because the tax position depends on your business structure and vehicles, your accountant should confirm the treatment for your fleet. We show the emissions of every vehicle we quote, so the tax effect is clear before you choose. Speak to our team.

Do leased vehicles appear on the balance sheet?

Leased vehicles now appear on the balance sheet for companies reporting under FRS 102, following changes that apply to accounting periods beginning on or after 1 January 2026. Most leases are recorded as a right-of-use asset with a matching lease liability, with exemptions for leases of 12 months or less and low-value assets. This changes how fleet finance shows in your accounts: the lease liability adds to reported liabilities, and the cost is split between depreciation and interest instead of a single rental line. Short-term hire, such as daily rental, can still be expensed. This FRS 102 factsheet on leases summarises the changes, and your accountant can confirm the effect on your accounts. We provide the rental, term and end-value details your accountant needs for each vehicle. Talk to us about fleet finance.

How does business contract hire benefit our cash flow?

BCH eliminates large upfront capital expenditure and protects your business from vehicle depreciation risks. By converting variable maintenance and running costs into a single, fixed monthly payment, you gain significant predictability for your financial planning.

Can we combine different vehicle types into one fleet finance agreement?

Yes. We can create a mixed fleet solution covering cars, vans, EVs, and specialist vehicles under a single, streamlined agreement, simplifying your administrative burden and reporting.

How do you support our transition to electric or hybrid vehicles?

We provide expert consultancy to help you analyse the suitability of electric and hybrid vehicles for your specific operational needs. From advising on charging infrastructure to whole-life cost modelling, we ensure your transition is financially viable and operationally seamless.

Supporting UK business fleets

Predictable fleet finance tailored to your business

We help businesses improve cash flow, reduce administrative pressure, and gain clearer visibility across vehicle expenditure. As an FCA-regulated partner, we deliver long-term fleet confidence through structured fleet finance and responsive operational support.

Discuss your fleet requirements

Fleet finance

Improve financial visibility and control

Managing a fleet involves more than just vehicle acquisition. We help finance directors and CFOs move away from the capital drain of ownership and the unpredictability of unexpected costs. Our bespoke finance packages, including business contract hire, provide the stability of fixed monthly payments, allowing for more accurate forecasting and a clearer understanding of your fleet’s total cost of ownership.

Business contract hire (BCH)

A fixed-cost solution ideal for businesses looking to minimise risk, simplify VAT reclaim, and avoid the complications of vehicle disposal.
Finance lease

Greater flexibility for businesses that prefer to manage the vehicle’s residual value risk or require a specific balance sheet approach.
Fully maintained packages

Consolidate servicing, maintenance, and tyres into one predictable payment to ensure your fleet remains operational without hidden costs.

Fleet finance FAQs

Selecting the right fleet finance solution is a significant operational decision for your business that requires balancing immediate cash flow, long-term tax implications, and your broader business requirements.

: The difference between business contract hire and a finance lease is who carries the vehicle’s value at the end. With business contract hire, the funder takes that risk and the vehicle is handed back. With a finance lease, the business takes the risk, usually sells the vehicle at the end and keeps most of the proceeds or covers any shortfall.

Business contract hire suits businesses that want fixed costs and no disposal work, while a finance lease suits those that want more control over the vehicle’s end value. VAT is handled differently too, as explained on our business contract hire page. Our article on choosing a finance option for your fleet compares the two with hire purchase and outright purchase.

Toomey Leasing Group can quote both options for the same vehicles so you can compare. Request a fleet finance quote.
: A fleet budget should be built from the whole life cost of each vehicle: rental or finance payments, fuel or charging, maintenance, insurance, tax and the admin time needed to run it. Comparing vehicles on whole life cost rather than monthly price shows which models are cheapest over the full contract.

Fuel or charging is often the largest variable cost, and HMRC’s advisory fuel rates give a starting point for business mileage in company cars. Company car tax and employer National Insurance also vary widely between models. Our whole life cost analysis builds these figures for each vehicle, and our guide to mastering your fleet budget covers forecasting and review.

We build a fleet budget from your current vehicles and show where costs could fall. Ask for a fleet budget review.
: Lease payments on business vehicles are generally deductible from taxable profits for corporation tax or income tax. For cars with CO2 emissions over 50g/km, 15% of the rental is disallowed, so electric and other very low-emission cars receive full tax relief on their lease payments.

HMRC explains the 15% restriction in its Business Income Manual, and it applies to cars, not vans. VAT on lease rentals is a separate question, covered on our business contract hire page. Because the tax position depends on your business structure and vehicles, your accountant should confirm the treatment for your fleet.

We show the emissions of every vehicle we quote, so the tax effect is clear before you choose. Speak to our team.
: Leased vehicles now appear on the balance sheet for companies reporting under FRS 102, following changes that apply to accounting periods beginning on or after 1 January 2026. Most leases are recorded as a right-of-use asset with a matching lease liability, with exemptions for leases of 12 months or less and low-value assets.

This changes how fleet finance shows in your accounts: the lease liability adds to reported liabilities, and the cost is split between depreciation and interest instead of a single rental line. Short-term hire, such as daily rental, can still be expensed. This FRS 102 factsheet on leases summarises the changes, and your accountant can confirm the effect on your accounts.

We provide the rental, term and end-value details your accountant needs for each vehicle. Talk to us about fleet finance.

: BCH eliminates large upfront capital expenditure and protects your business from vehicle depreciation risks. By converting variable maintenance and running costs into a single, fixed monthly payment, you gain significant predictability for your financial planning.
: Yes. We can create a mixed fleet solution covering cars, vans, EVs, and specialist vehicles under a single, streamlined agreement, simplifying your administrative burden and reporting.
: We provide expert consultancy to help you analyse the suitability of electric and hybrid vehicles for your specific operational needs. From advising on charging infrastructure to whole-life cost modelling, we ensure your transition is financially viable and operationally seamless.