What is Business Contact Hire (BCH)?
Business Contract Hire (BCH) is a way for companies, sole traders and partnerships to lease cars or vans without buying them outright.
It works like long-term vehicle hire. Your business chooses a vehicle, agrees a contract length and mileage allowance, then pays a fixed monthly rental. At the end of the agreement, you return the vehicle.
At LeaseCar, we help businesses find vehicles that fit their budget, usage and tax position — whether it’s one company car or a growing fleet.
Key takeaways
BCH stands for Business Contract Hire
It is designed for business vehicle leasing
Your business does not own the vehicle
Monthly rentals are fixed for the contract term
You return the vehicle at the end
VAT-registered businesses may be able to reclaim some VAT
Electric vehicles can offer lower Benefit-in-Kind costs for drivers
How does Business Contract Hire work?
A BCH agreement is built around your business needs.
You choose:
The vehicle
Contract length
Annual mileage
Initial rental
Whether to add maintenance
Delivery requirements
Most contracts run for 24, 36 or 48 months.
Once the agreement is in place, your business pays a fixed monthly rental for the vehicle. When the contract ends, you return it and can choose a new lease.
Who is BCH best for?
Business Contract Hire can suit:
Limited companies
Sole traders
Partnerships
Small businesses
Fleet managers
Businesses needing cars or vans for staff
It is often a good fit if your business wants predictable costs and does not want the risk of owning depreciating vehicles.
Main benefits of Business Contract Hire
Fixed monthly costs
BCH makes budgeting easier because your monthly rental is agreed at the start. You know what the vehicle costs each month, how long the agreement lasts and what mileage it includes.
No depreciation risk
Your business does not own the vehicle, so you do not need to worry about resale value. At the end, you return the vehicle, move into a newer model if needed and avoid the hassle of selling or part-exchanging.
VAT advantages
If your business is VAT-registered, you may be able to reclaim VAT on lease costs.
In general:
If the car has any private use, 50% of VAT on finance rentals is normally blocked
If it is used only for qualifying business purposes, more VAT may be recoverable
VAT on maintenance/service charges is treated separately
Always confirm your position with your accountant. HMRC’s VAT guidance explains the 50% block on leased cars where private use is assumed.
Lower admin burden
Business leasing can reduce admin compared with owning vehicles. Depending on the agreement, you may get support with:
Road tax
Delivery
Vehicle documents
Maintenance planning
Replacement cycles
Access to newer vehicles
BCH helps businesses keep vehicles modern, efficient and professional. That can support staff satisfaction, customer impression and help with emissions targets for your business, too.
You can also enjoy the safety and reliability of a new vehicle.
Should you add maintenance?
For business users, maintenance can be especially useful. A maintenance package helps cover servicing, routine maintenance and replacement wear items (depending on the plan).
The benefit is simple: fewer unexpected bills and less downtime.
For businesses, downtime can cost more than the repair itself — so maintenance is worth discussing when building your lease.
Business Contract Hire and Benefit-in-Kind
If an employee uses a company car privately, Benefit-in-Kind (BiK) tax may apply.
BiK is based on factors such as:
Vehicle list price
CO₂ emissions
Fuel type
Employee tax rate
Electric vehicles remain particularly attractive for company car drivers because their BiK rates are still much lower than petrol or diesel alternatives. HMRC updates company car benefit percentages, so rates should always be checked against current guidance.
Browse our recommended green car deals for businesses to see what savings LeaseCar could help you make.
Things to consider before choosing BCH
BCH is useful, but it is not right for every business.
Remember:
You do not own the vehicle
There is usually no option to buy it
Mileage limits apply
Excess mileage may be charged
Early termination can be expensive
Fully comprehensive insurance is normally required
The vehicle must be returned in fair condition
It is also worth comparing BCH with personal leasing if you are a sole trader or director with mixed personal and business use.
Business Contract Hire vs Personal Contract Hire
The product is similar, but the customer is different.
BCH
Agreement is for business use; may offer VAT and tax advantages; suitable for company cars, vans and fleets.
PCH
Agreement is for private individuals; no business VAT reclaim and better suited to personal use.
If you are unsure which route makes sense, speak to your accountant and talk to our team before applying.
Is BCH right for your business?
Business Contract Hire may suit you if your business wants:
Predictable monthly costs
Newer vehicles
Less admin
No resale hassle
Potential VAT advantages
A simple way to manage one or more vehicles
It may be less suitable if your business wants to own vehicles long-term or needs complete flexibility to sell them at any time.
Speak to LeaseCar about business leasing
At LeaseCar, we help businesses choose vehicles that match their needs, budget and usage.
Whether you need one car or support with a small fleet, we can help you compare options and build a lease that works for your business.
Browse our latest business lease deals or speak to our team on 0344 745 1818 for straightforward advice.