VAT on car leases in the UK

We produced an informative video for our Leasing / Contract Hire brand to demonstrate the VAT benefit of leasing a car (not a van!) in the UK. This was after much confusion around what the benefit is.

Many companies claim that recovering 50% of the VAT on the finance rentals on a lease or contract hire is a benefit. Well, of most businesses that have 100% VAT recovery rate, they can claim 100% of the VAT on purchases. This assumes of course that they are not operating a flat rate VAT scheme.

This is often contrasted with the ability to claim 100% of the VAT on the service element of the lease or contract hire arrangement. See note above, this is what you would expect, right?

So what is the benefit?

All will become clear...............