A fixed term business contract which can incorporate maintenance for accurate monthly budgeting.
Contract Hire is a popular way of hiring a business vehicle, whereby a vehicle is hired to a company for a specified time and mileage, in return for an initial fee (typically equivalent to 3 monthly rentals) and a subsequent monthly charge.
This type of hire removes many of the risks associated with vehicle ownership, such as depreciation, servicing costs and vehicle depreciation on eventual sale.
A contract hire vehicle does not have to be shown as an asset on your balance sheet because it is owned by the leasing company. Some or all of the rental charge can be offset against taxable profits.

Features and benefits:

  • Contract periods can be selected from 24 months up to 60 months
  • Use of the vehicle is provided over the contract period. Payments can include routine servicing and necessary repair costs (excluding accident damage), as well as breakdown & recovery
  • Choose from any make or model of vehicle, new or nearly new, car or van up to 3.5t
  • This type of hire removes many of the risks associated with vehicle ownership, such as depreciation, servicing costs and vehicle depreciation on eventual sale
  • Fixed monthly rentals allow for accurate monthly budgeting
  • VAT on new and VAT qualifying cars is recovered by the finance company and this reclaim benefit is passed on to the customer via lower rentals
  • VAT is 100% reclaimable on the management element (ie maintenance) of the monthly rental
  • For cars, 50% of VAT is reclaimable on the vehicle rental assuming some private use, or 100% of VAT can be reclaimed if there is no private use
  • VAT is 100% reclaimable for commercial vehicles
  • You can increase contracted miles during the contract term
  • The end of contract process is easy; simply hand the vehicle back
  • There is an option to extend the contract

Things to be aware of:

  • You bear the costs of any excess mileage as a pence per mile charge when the contract is terminated
  • High fees for early settlement of the contract
  • Vehicle must be returned in a well maintained condition
  • You do not have the option of owning the vehicle