Contract Hire
The most popular choice for VAT – registered and non VAT – registered companies that want minimum outlay and maximum control of costs, especially when the maintenance and relief vehicle options are included. With this VAT – beneficial financing package, one regular rental payment covers all risks, including costs of depreciation and disposal, for an agreed period of time and mileage. Road Fund License is included, but roadside rescue, maintenance and relief vehicle provision are options that can be added and changed to the monthly rental.
The benefits of Contract Hire:
- Up to 100% tax deductible depending on cost of vehicle
- Low initial outlay
- Flexible contracts
- No residual risk
- No disposal issues
- Optional relief vehicle whilst yours is off the road
- Capital not tied up in a depreciating asset
- Off-balance sheet borrowing/accounting
- Fixed cost and optional maintenance
- VAT on rentals reclaimable (reduced to 50% for cars used privately)
- Road fund license included for the full contract length
Please see attached chart which gives you an overview of product features. However please feel free to contact us to obtain further in depth information.
| Contract Hire | Contract Purchase | Hire/Lease Purchase | Finance Lease | PCH/PCP | Outright Purchase | |
|---|---|---|---|---|---|---|
| Accurate monthly budgeting | X | X | X | X | X | |
| Improved cash flow | X | X | X | X | X | |
| Low Deposit | X | X | X | X | ||
| Fixed interest rates | X | X | X | X | X | n/a |
| Capital allowances available | X | X | n/a | X | ||
| Ownership of vehicle | Optional | X | Optional | X | ||
| VAT recoverable on rentals | X (1) | X (1) | ||||
| VAT recovered by lease company to reduce rental | X | X | ||||
| No depreciation risks | X | X | X | |||
| Note 1: Only 50% of the VAT relating to the finance element is recoverable if there is private use of the vehicle. If the vehicle is only used for business purposes 100% of the service element VAT is recoverable on contract hire only. | ||||||
Running the Vehicle
| Contract Hire | Contract Purchase | Hire/Lease Purchase | Finance Lease | PCH/PCP | Outright Purchase | |
|---|---|---|---|---|---|---|
| Vehicle disposal | X | X | X | |||
| Reduced administration | X | X | Optional | Optional | X | Optional |
| Road fund licence provided | X | X | X (2) | |||
| Breakdown cover | Optional | Optional | Optional | Optional | Optional | Optional |
| Relief vehicle | Optional | Optional | Optional | |||
| Fixed charge maintenance | Optional | Optional | Optional | |||
| Payment Protection | Optional | Optional | Optional | Optional | Optional | |
| VAT recoverable on services | X | X | X (2) | X | ||
| Optional GAP insurance | X | X | X | X | X | |
| Note 2: Road fund licence is provided for the first year only. | ||||||
