Contract Hire

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A fixed term business contract which can incorporate maintenance for accurate monthly budgeting.

Contract Hire is a popular way of hiring a business vehicle, whereby a vehicle is lease to a business for a specified time and mileage in return for an initial fee (typically equivalent to 3 monthly rentals) and a subsequent monthly charge.

This type of hire removes many of the risks associated with vehicle ownership, such as depreciation, servicing costs and eventual sale.  However, the hirer could lose any potential benefits of vehicle ownership such as running costs or an unexpected upturn in the residual value a particular vehicle.

A contract hire vehicle does not have to be shown as an asset on your balance sheet because it is owned by the leasing company.   Some or all of the rental charge can be offset against taxable profits.

 

  • Usage of the vehicle is provided over the contract period. Payments can include routine servicing and necessary repair costs (excluding accident damage), as well as breakdown & recovery
  • Choose from any make or model of vehicle, new or nearly new
  • VAT is 100% reclaimable on the management element (ie maintenance) of the monthly rental.
  • For cars, VAT is 50% reclaimable on the vehicle rental assuming some private use of the vehicle or 100% for no private use – contact us for more details.
  • VAT is 100% reclaimable for commercial vehicles
  • You bear the costs of any excess mileage.
  • At the end of the contract the vehicle is simply returned or you may choose to extend the contract.
  • Contract periods can be selected from between 24 months and 60 months, with or without a balloon payment at the end of the contract (subject to the age of the vehicle at the start of the contract)
  • Typically a minimum initial payment equivalent to three monthly payments is required.
  • Fixed monthly rentals.
  • VAT on new and VAT Qualifying cars is recovered by the finance company and passed on to the customer via lower rentals.
  • Tax Allowances are CO2 based up to 160 g/km which is 100% allowable and over 160 g/km is 85% allowable.

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