Contract Hire is a hire agreement with fixed term and costs.
Title to the car is never passed to you and at the end of contract the car is returned to the funder, ensuring you have no disposal worries. VAT is charged on the monthly rental.
The are two levels of agreement
Maintenance contract - A maintenance contract includes :
- Use of the vehicle
- All routine servicing
- All maintenance items, e.g pads, oil, adjustments etc
- Tyres can be included
- Road fund licence
- Extra options include emergency breakdown cover and a relief car (this covers accident or mechanical failure)
Non maintenance contract - A non maintenance contract includes :
- Use of the vehicle
- Road fund licence
The benefits of contract hire
- Eases cash flow
- Low initial outlay (typically three rentals in advance)
- No company vehicles depreciation risk
- Leaves company funds free to run & develop your business
- Off balance sheet
- Rentals can be tax efficient
- Fixed budgeting
- Greatly reduced fleet administration
