What Is A Contract Hire Agreement?
Stable
Mon - Fri : 9am - 6pm Call us: 0151 728 4711

What Is A Contract Hire Agreement?

What Is A Contract Hire Agreement?
Posted in Insider News On By David Moffatt

If your business is looking for a comprehensive, fixed cost motoring package where full usage of a new vehicle is important but ownership is not, then you should consider contract hire. [caption id="attachment_147" align="alignright" width="300"] Car Contract Hire Is Becoming Popular For Business Users[/caption] This is essentially an operating lease, which enables you to drive a new 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 to consider as extras. As you are hiring the vehicle as opposed to buying it, at the end of the contract you simply hand the vehicle back, leaving you with no disposal worries (subject to mileage and condition). Contract Hire is also an extremely tax efficient method of funding a business vehicle, as rentals may be offset against taxable profits. Additionally, if your business is registered for VAT, 100% of the VAT payable on the finance element of the rentals may be recovered where the vehicle is either a van or a car used solely for business purposes. Where the vehicle is a car used for business and private mileage, then only 50% of the VAT payable on the finance may be recovered.

Key Benefits

  1. A low initial outlay, usually 3 months advanced rentals
  2. Contracts available for periods of 1 to 4 years depending on the vehicle usage
  3. Monthly rentals are pre-determined for the entire contract period
  4. Known additional charge if the contract mileage is exceeded
  5. Road Fund Licence is included with the contract
  6. Full maintenance may be included as part of all contract hire agreements
  7. As the vehicle is simply returned at the end of the contract, there are none of the problems or risks associated with disposal
  8. If registered for VAT your business may reclaim all, or some of the VAT payable on the finance element of the rentals
  9. This form of funding is considered to be “off balance sheet” and the vehicle will not be shown as an asset within the company’s balance sheet
If you are thinking about changing your vehicle in the near future please join the thousands of subscribers who already receive our weekly newsletter.  Each week we aim to send out a selection of the very best contract hire & leasing offers in the UK! If you have any questions or just want some straight talking advice please feel free to call our team on 0151 728 4711 or visit Stable Vehicle Contracts.