Business Contract Hire
What is Business Contract Hire?
Contract Hire is a funding method suitable for business entities registered for VAT – up to 100% of VAT can be reclaimed, provided there is no element of personal use. If there is an element of personal use, then only 50% of the VAT is reclaimable.
Vehicles are hired for an agreed period of time, usually between 12 and 60 months. A rental is paid based on a pre-agreed mileage. Business Contract Hire agreements can include the full maintenance of the vehicle including all consumable items such as tyres and brakes. Your road tax will also be included as part of the deal.
At the end of the contract, the vehicle is simply returned to ourselves, so alleviating any disposal issues or depreciation risks. Up to 100% of rentals can be offset against taxable profits, subject to some revenue limitations.
The benefits of Business Contract Hire
One of the primary benefits of business contract hire arrangement is that your company hires a vehicle from us for a pre-determined period at a fixed monthly rate.
- We retain ownership and at the end of the fixed period the vehicle is simply returned to us
- The single, fixed monthly rental takes into account the cost of the car, its rate of depreciation, the length of the contract, mileage and any additional services you may wish to build in
- The majority of our customers choose to include maintenance cover within their company car contract hire, with full RAC breakdown and recovery service, keeping drivers on the road without involving the company in complex or costly administration
- As part of the agreement, any extra costs can be included such as road tax, servicing and MOTs.
How does Business Contract Hire and Car Leasing work in the UK?
With a Business Contract Hire agreement, you’ll make an initial deposit, followed by regular monthly instalments. At the end of the contract, the vehicle is returned and you’ll be able to take up a new leasing arrangement.
The down payment is typically between three and six months’ worth of rental. It will also be affected by the number of miles you agree on an annual basis.
- Currently off balance-sheet funding as all ‘risk and reward’ remains with Autograph
- Rental allowances typically provide accelerated tax benefits
- We reclaim the VAT on the purchase of the vehicle, and pass that saving on to you in the form of lower monthly rentals
- Removes disposal risk and protects your future profits
- A maintenance-inclusive contract hire agreement will remove the inherent risks associated with running a fleet of company vehicles
- Your monthly fleet outgoings are fixed and incorporate realistic running costs, giving you greater budgetary control
- Improved gearing
- Lines of credit can be better utilised for investment in your core business
- Flexible company car hire contracts to reflect the changing nature of your business
- Peace of mind.
For free advice on a Business Contract Hire and Business Car Leasing options for your company, please contact our team at Autograph Contracts on 01622 871874. We would be delighted to discuss your options in more detail.