Company Helicopter Finance - What You Need to Know
Financing a helicopter through a limited company is technically straightforward - lenders are experienced in company applications and the process is not significantly different from personal finance. The complexity lies in the tax and structuring decisions that sit around the finance, particularly where the aircraft will be used partly or wholly for private or personal travel by the company's directors or shareholders.
HMRC scrutinises helicopter ownership through companies carefully. If the aircraft is used for genuine, wholly commercial purposes - charter, offshore support, training, HEMS - and there is no element of private use, the tax position is relatively clean. Where there is any private use, BIK charges and potential restrictions on VAT recovery will apply, and advice from a specialist tax adviser is essential before structuring the purchase.
The choice of finance product - hire purchase, finance lease or operating lease - also has significant tax implications for a company borrower, affecting how the cost of the aircraft flows through the P&L, the timing of tax relief and the balance sheet presentation. We work closely with specialist aviation tax advisers and can introduce you to the right support if needed.
| Finance Type | Typical Rate | Typical LTV | Typical Term |
|---|---|---|---|
| Hire Purchase (company) | 6.0% – 8.5% | Up to 85% | 3–12 years |
| Finance Lease (company) | 6.2% – 8.5% | Up to 80% | 3–10 years |
| Operating Lease (company) | Rental-based | N/A | 2–7 years |
| SPV Purchase (HP) | 6.5% – 8.5% | Up to 80% | 3–10 years |
Key Tax Considerations for Company Helicopter Buyers
Benefit-in-Kind (BIK)
Any private use of a company-owned helicopter by a director or employee triggers a BIK charge under ITEPA 2003. The charge is broadly 20% of the aircraft's market value per annum, payable by the individual as income tax and by the company as Class 1A NIC.
Capital Allowances
HP and outright purchase allow the company to claim capital allowances on the helicopter - potentially 100% in year one via the AIA. Finance lease payments are deductible as they are made. Operating lease rentals are fully deductible as revenue expenditure.
VAT Recovery
VAT on the purchase or finance payments for a helicopter can be reclaimed if the aircraft is used exclusively for VAT-able business purposes. Any element of private use reduces or eliminates the VAT reclaim, and partial exemption calculations may be required.
Director Guarantees
Most SME lenders require personal guarantees from the company's directors as a condition of lending. A guarantee means the director is personally liable if the company fails to meet its finance obligations - this should be considered carefully alongside the corporate borrowing structure.