Business Contract Hire
From Wikipedia, the free encyclopedia
Business Contract Hire is a finance term in the car business used in the UK. The US equivalent is a business vehicle lease. Contract Hire is a very popular choice for V.A.T Registered companies with more than 40% choosing this Funding method (Fleet Week). Tax advantages and reduced administration assists business to budget more accurately for their vehicle requirements. Contract Hire is available to Sole Traders, Partnerships and Ltd Companies.
[edit] Finance / Taxation Benefits
- Accurate Monthly Budgeting
- Off Balance Sheet
- Improved Cash Flow
- Minimum Capital Expenditure
- Fixed Interest Rates
- Rentals Allowable against Taxable Income, subject to the 'half the excess rule' partial disallowance
- V.A.T Recoverable on Monthly Rentals*
- No Depreciation Risks
The tax rules surrounding vehicle leasing are currently the subject of a UK government review, and may change soon.
* Only 50% of the V.A.T relating to the Finance element is recoverable if car has private usage. 100% if Business only. On Contracts with Maintenance the Service element V.A.T is Recoverable.
[edit] Vehicle Running Benefits
- No Vehicle Disposal Problems
- Reduced Administration
- On-going Advice and Support
- Road Fund Licence Provided for Duration of Contract
- Optional Maintenance Package
- Optional Breakdown Rescue Cover
- Optional Replacement Vehicle Cover in Event of Breakdown
- Optional GAP Insurance*
*GAP Insurance provides cover for the shortfall between the outstanding Finance and the Insurance Value if vehicle is declared a Write-off by your Insurance Company.
