Contract Hire
Car Contract Hire is the ideal funding method for any VAT registered company looking to benefit from fixed cost motoring and tax effective funding.
Ownership of the vehicle, during the contract hire period, remains in the hands of the finance provider at all times and a comprehensive maintenance package can be included. As a result the finance providers are responsible for many of the potential risks in running the vehicle such as unforeseen repair costs and uncertain resale values.
The fixed monthly rental is charged based upon the cost of the car, your chosen contract hire period and anticipated mileage. This takes into account predicted resale value and if included, service and maintenance costs.
Rentals paid on car contract hire vehicles under £12000 are fully deductible against corporation tax. For higher value vehicles a certain proportion of the rental can be offset.
VAT is charged on rentals which are split into finance and service. 50% of VAT is recoverable on the finance element, whilst the full VAT figure is recoverable on service and maintenance.
At the end of the car contract hire period, you have the choice of returning the vehicle to us with nothing to pay* and starting a new agreement; or keeping the vehicle on a contract hire agreement for a further period, often at a reduced monthly rental.
Vehicles on contract hire are not recorded as assets on your balance sheet, neither is the liability on the finance, so your return on assets ratio can improve accordingly.
Car Contract Hire Key Benefits
- Fixed cost risk free motoring
- Minimal initial outlay
- Tax efficient funding for many vehicles
- No final payments
- VAT efficient
- Off balance sheet means improved performance ratios
- Benefit from major discounts and volume bonuses
- Releases capital for essential business needs
- Comprehensive network of high quality maintenance providers (e.g. RAC, Kwik Fit, Autowindscreens etc)
- Ability to renew your vehicle on a regular basis
- Can make expensive models affordable
*Excess mileage and damage recharges will still be due if applicable on return of the vehicle to the finance providers.
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