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Business Contract Hire

Business Contract Hire enables a company to run its fleet of vehicles at a fixed cost. Lease periods are available from 2 to 5 years, and In most cases, the longer the lease term, the lower the cost of the monthly rental. The most common contract term is 3 years, as this is the length of most manufacturers’ warranty period.

The monthly business contract hire rental is determined by many factors including the capital cost of the vehicle, the estimated resale (residual) value, the contract term, and the mileage allowance on the contract.

Improved cash flow
No depreciation risks
Rentals allowable against taxable profit
Accurate monthly budgeting
Fixed interest rate
The funder reclaims the VAT on the original purchase of the vehicle, which reduces the customers rentals which are charged excluding VAT
Off Balance Sheet funding
50% of the VAT is reclaimable on the monthly payments (assuming an element of private mileage)
Where a vehicle is used solely for business, for example a pool car, 100% of the VAT is reclaimable
VAT on the maintenance element is reclaimed at 100%

Several options are available on a Business Contract Hire, to allow companies to accurately budget throughout the lease period; these include a maintenance option, which covers all servicing, routine maintenance and replacement tyres. For more information regarding additional products and services visit our Maintenance page.

At the end of the contract period the company has 2 options:

1. They can hand the vehicle back (collection is usually free of charge)
2. They can request a quote to extend the contract for a formal 6 or 12 month period

The sales team at Contract Hire UK understand and appreciate that each organisation’s requirements are different. Their experience ensures you are offered a package that provides the best solution for your company.

For more information regarding Tax implications for both Companies and Employees visit our Taxation pages.