Contract Hire is a simple and convenient solution for companies who wish to lease a car so that depreciation, funding, administration, road tax and (sometimes) maintenance costs are covered by a monthly fixed cost with no need to dispose of the vehicle at the end of the contract. Contract Hire is often the best option for VAT registered companies who want to have the minimum outlay and the benefit of knowing that monthly payments will stay the same over a set period.
The monthly rental is calculated taking into account the vehicle’s purchase price, the length of the contract period, the predicted mileage, service and maintenance costs and re-sale value at the end of the lease term. The only variation in your payment will result from you exceeding your predicted mileage, where an excess payment will be due based on how many extra miles you have driven, or if the contract needs to be renegotiated to take into account a decrease or increase in your mileage.
Contract Hire is often the best option for VAT registered companies who want to have the minimum outlay and the benefit of knowing that monthly payments will stay the same.
Contract Hire can be financially beneficial to your company. The car remains the property of the hire company so it is off your company’s Balance Sheet. Subject to your VAT status, you can claim back 50% of the VAT of the finance element of the rental agreement and 100% of the VAT for the service element. In addition, leased company vehicles normally qualify for beneficial Corporation Tax treatment with varying degrees of benefit depending on the value of the vehicle.
At the end of the Contract Hire period, you have the choice of buying the vehicle, handing it back or extending the vehicle rental period either informally or formally.
If you think this sounds like the right option for you, please contact us at GWA to arrange a meeting to discuss a financial package that will best meet your requirements.