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PCP option for business vs leasing?

  • 21-05-2020 9:41pm
    #1
    Casati
    Registered Users, Registered Users 2 Posts: 3,053 ✭✭✭


    I might have got it wrong but heard VW Financing are offering PCP for business now. Wonder it this is possible as I think it would mean no Vat charged like a lease so would possibly make it cheaper?

    My understanding is that unlike private PCP you have the option of zero deposit. Have not worked out numbers but actively sourcing a car for business and appreciate hearing from anybody that might have done this or know anything about it.

    Note I’m well aware of how personal PCP works and know the advantages etc. The car in question must be brand new and business does not want to purchase outright


Comments

  • #2
    R.O.R
    Registered Users, Registered Users 2 Posts: 12,712 ✭✭✭✭R.O.R


    You'll still have to pay the VAT - even on a lease the VAT is not reclaimable on the finance portion of the lease, only maintenance / tyres.

    If there's a guaranteed value in the contract, you will have to list it as an asset on the company accounts, rather than the lease that is off balance sheet.


  • #3
    Casati
    Registered Users, Registered Users 2 Posts: 3,053 ✭✭✭Casati


    R.O.R wrote: »
    You'll still have to pay the VAT - even on a lease the VAT is not reclaimable on the finance portion of the lease, only maintenance / tyres.

    If there's a guaranteed value in the contract, you will have to list it as an asset on the company accounts, rather than the lease that is off balance sheet.

    Okay I didn’t know the VAT element wasn’t reclaimable on the core lease. PCP is technically a hire purchase agreement I think, but I don’t know if that means if you have to list it as an asset? The residual as you know in most PCP’s is almost zero

    I’ll find out more from Volkswagen


  • #4
    Casati
    Registered Users, Registered Users 2 Posts: 3,053 ✭✭✭Casati


    Casati wrote: »
    Okay I didn’t know the VAT element wasn’t reclaimable on the core lease. PCP is technically a hire purchase agreement I think, but I don’t know if that means if you have to list it as an asset? The residual as you know in most PCP’s is almost zero

    I’ll find out more from Volkswagen

    Question - the car will be an estate car and it won’t be used for any private use at all but rather as a pool car for business purposes - does that make any difference it VAT is reclaimable or not?


  • #5
    R.O.R
    Registered Users, Registered Users 2 Posts: 12,712 ✭✭✭✭R.O.R


    Casati wrote: »
    Question - the car will be an estate car and it won’t be used for any private use at all but rather as a pool car for business purposes - does that make any difference it VAT is reclaimable or not?

    If it's a passenger car the VAT on the finance amount on a lease is none reclaimable, regardless of usage.

    If it's a Commercial vehicle, the VAT on the finance amount on a lease is fully recoverable, regardless of usage.

    With no 5 Seat commercials any more except pick-ups, there's no other option than a car and paying VAT really. A Pick-up (if that would even be suitable for your business) will probably still end up more each month than an estate car after the VAT reclaim is taken in to account.


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