What is contract hire?
Business Contract Hire
A comprehensive, fixed cost motoring package where full-usage is important but ownership isn't.
Description
Contract Hire is essentially an operating lease and enabling you to drive the vehicle of your choice on a 'fully inclusive' basis. Maintenance can be included as part of the contract, leaving you with only fuel and insurance as extras.
As you are hiring the vehicle as opposed to buying it, you have no disposal worries; at the end of contract you simply hand it back.
Contract Hire is an extremely tax efficient funding method. For vehicles having a retail price of up to £12000, full tax relief is available on the rentals. Where a vehicle costs in excess of this sum, tax relief is restricted to the following:
Full tax relief may be claimed on any maintenance element of the rental.
Additionally, if you are registered for VAT and the vehicle is used solely for business purposes or a van, 100% of the VAT payable on the finance element of the rentals may be recovered. Where a car is used for business and private mileage, 50% of the VAT payable on the finance element of the rentals may be recovered.
Key Benefits
- Low initial outlay, usually 3 months advance rentals
- Monthly rentals are determined for the entire contract period
- No disposal risks or depreciation worries; the vehicle is simply returned at the end of the contract
- Rentals may be offset against taxable profits, improving your cash flow and tax position
- If registered for VAT you may claim all, or some of the VAT payable on the finance element of the rentals
- Full maintenance may be included as part of Contract Hire agreements
- Contract Hire is considered to be 'off balance sheet'
Personal Contract Hire
A comprehensive, fixed cost motoring package where full-usage is important but ownership isn't.
Description
Personal Contract Hire is essentially long term rental and enabling you to drive the vehicle of your choice on a 'fully inclusive' basis. Maintenance can be included as part of the contract, leaving you with only fuel and insurance as extras.
As you are hiring the vehicle as opposed to buying it, you have no disposal worries; at the end of contract you simply hand it back.
Key Benefits
- Low initial outlay, usually 3 months advance rentals
- Monthly rentals are determined for the entire contract period
- No disposal risks or depreciation worries; the vehicle is simply returned at the end of the contract
- Full maintenance may be included as part of a Personal Contract Hire agreements
