Contract Hire
Contract Hire is the facility where you the customer have use of the vehicle for a set period. The contract can be taken with or without maintenance. To determine the rental we need to know what your annual mileage is. At the end of the term the vehicle is simply returned with no further costs. (subject to excess mileage and any damage)
How Does it Work?
The funding of company vehicles, regardless of fleet size can be a significant drain on financial and human resources, especially at a time when resale values are increasingly volatile.
Contract Hire can remove both the financial and administrative burden from your business. It can deliver a tax efficient form of funding which eliminates risk and helps cash flow.
Your company hires a vehicle from the Contract Hire Company for a pre-determined period at a fixed monthly rate.
Ownership of the vehicle remains with the funder. At the end of the Hire period the vehicle is simply returned. (subject to excess mileage and any dsamage)
The single fixed monthly rental takes into account the cost of the vehicle, its rate of depreciation, the length of the contract, mileage and any additional services you may wish to build in.
You can choose to include maintenance , with full breakdown cover, This will cover all of the servicing costs and replacement tyres, exhausts etc throughout the duration of the contract . Auto assist and replacement vehicle options can also be taken to ensure you are never left without a vehicle.
The Benefits
Low initial payment, typically three monthly rentals.
Road Fund Licence included for the term of the contract.
Currently off Balance sheet funding as all risk remains with the Contract Hire Company.
- Lower monthly rentals as the finance company reclaims VAT on the vehicle purchase - benefiting your cashflow
- You can reclaim 50%* of the VAT on the monthly rentals
- Your initial capital outlay is reduced allowing your funds to be retained in the business.
* 100% of the Vat on rentals can be reclaimed on cars used exclusively for business and on commercial vehicles. If any private use occurs (e.g. taking the vehicle home at night), 50% of the VAT is reclaimable. It should also be noted that this could lower depending upon the individual VAT recovery position of the business.
** The proportion of rentals that can be claimed is reduced for high cost cars.
Rental allowances typically provide accelerated tax benefits.
The Contract Hire Company reclaim the VAT on the purchase of the vehicle and pass that saving on to you in the form of lower monthly rentals.
Removes disposal risks and protects your future profits.
A maintenance inclusive contract will remove the inherent risks associated with running a vehicle.
Your monthly outgoings are fixed and incorporate realistic running costs, giving you greater budgetary control.
Lines of credit can be better utilised for investment in your business
Peace of mind.