With Contract Hire, your vehicle costs are fixed and certain no matter what happens to the world economy. You don’t have to worry about sub-prime mortgages, bank runs, stock market crashes, plummeting residual values or unexpected repair costs. Contract hire eliminates the risk. That’s why it’s one of the UK’s most popular forms of vehicle finance, with over 50% of UK businesses choosing it as their preferred funding method.
What is Contract Hire ?
Contract Hire is simply a method of hiring a new or used vehicles for use over an agreed time and mileage without ownership, the monthly rental is fixed (often referred to as an Operating Lease). This can include a range of additional services such as servicing, maintenance, tyres and road fund licence. This method of funding is a popular choice for VAT Registered companies, with more than 40% choosing this method. The term of the contract can range from 24 to 48 months and usually up to 120,000 miles.
Suitable For
- Organisations with standard VAT & Corporation Tax situations
- Cars with a retail value of less than circa £25,000 and any light van
Main Features
- Contract period & mileage set to match client usage patterns
- Optimised cash flow from fixed rental payments
- Fixed operating costs – resale value risks eliminated
- Service and maintenance can be included
- Roadside assistance and recovery included
- Can include relief vehicle provision and accident management
Balance Sheet
- Off-balance sheet funding – enhances business ratios
VAT Treatment
- VAT free funding reduces cost of rental
- 100% of VAT on service element of rental reclaimable
- 50% of VAT on funding element of rental normally reclaimable
- All VAT reclaimable on cars with no private use
- All VAT reclaimable on vans
Corporation Tax
- Relief for cost of rentals spread over full period of contract
End Of Contract
- Vehicle collected by ecofleet / suppliers – no further client commitment
- Excess mileage charges levied if contract mileage exceeded
- Reinstatement charges made if unfair wear & tear evident
ecofleet Features
- Buying power ensures consistently keen pricing
- Cars delivered and collected FOC
- Servicing provided by client convenient agents
- Attractive driver purchase option at end of contract
All information provided on this site is for guidance only. We recommend that you seek professional advice from your accountant and tax office before making any decisions. eco fleet uk Ltd accepts no legal liability for the information given as it has been provided for illustration only. It is your responsibility to check the validity of this with the relevant authorities.
