Contract hire facts and figures

Contract car hire is available for both private individuals and companies and is worth considering if you’re thinking about motorbike hire London or other vehicle hire. For the businessman, contract hire is the simple solution for vehicle funding. Cars or commercial vans can be hired and they are available to sole traders, partnerships and limited companies, enabling them to acquire their vehicles without the financial risk of depreciation on what would normally be a large capital outlay. For the individual, contract car hire has all the benefits of owning a car without the risks of ownership.

Have a look at some of the key facts and figures of contract hire:

• Frees up a large amount of working capital for other business projects. This removes the risk of depreciation or of any time-consuming disposal problems
• Minimum outlay, which is usually equivalent to three monthly rentals, improves cash flow
• Costs are fixed ensuring maximum control for accurate monthly and annual budgeting.
• Fixed interest rates mean inflation-proof rentals
• Vehicles do not show on balance sheet. Monthly rentals can therefore be offset against taxable profits
• Tax efficient, with up to 100% corporation tax relief on rentals proportional to the vehicle purchase price
• Because leasing companies can recover VAT on qualifying car purchases the reduction in capital outlay is passed on to the customer in lower monthly rentals.
• VAT is charged on monthly rentals, but VAT is reclaimable on monthly rentals, too
• Road tax is usually included for the duration of the lease
• Fixed maintenance charges are optional. Maintenance usually means routine services, plus consumables under fair wear and tear such as tyres, batteries, exhausts, windscreen wipers etc
• Fixed charges for a replacement vehicle in case of breakdown or accident are optional

• Fixed charges for breakdown rescue cover are optional
• VAT is chargeable on services and maintenance, but 100% of VAT is also recoverable on services and maintenances

• Certain lease agreements can be extended

Companies can take advantage of vehicle contract hire to create a regular turnover of new or nearly new and prestige cars, which improves mechanical reliability and portrays a professional image in the business market with the minimum capital outlay.