Contract Hire And Leasing2020-04-03T17:00:19+00:00

For businesses looking to run a fleet of vehicles and wanting to benefit from spreading the cost and minimising the risk of ownership and maintenance, contract hire is the perfect solution. Whether you are looking for a small fleet of executive cars or a larger, nationwide fleet of vans, the benefits of contract hire are wide ranging.

How does contract hire work?

Contract hire and leasing provides a tailored approach to building your car or van fleet, enabling you to add or reduce the number of vehicles required easily and cost effectively.

Ownership remains with the leasing company, as does all the administration, vehicle tax, and often servicing and maintenance.

Contracts typically range from 24-60 months, although short term leasing can also be arranged.

business car contract hire

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What are the benefits of contract hire?

Car contract hire provides companies with fixed cost motoring, which helps improve budgeting and cash flow as the cost of vehicle provision is spread into regular, usually monthly, payments. Rental payments are also up to 100% tax deductible as long as certain criteria are met.

For small to medium sized enterprises, freeing up company capital that might otherwise have been spent on cars or vans is one of the key benefits of contract hire. In addition, for most businesses, vehicles on contract hire do not appear on the balance sheet.

Also, vehicles are a depreciating asset with uncertain future resale values which can bring uncertainty, risk and variability of actual cost.

Then there’s the added advantage of regular replacement cycles through a business contract hire agreement which gives a positive brand image for your business and helps to keep employees happy.

For VAT registered companies, the benefits of contract hire cars or contract hire vans are even greater, as you can claim back 50% of the VAT paid on the finance element and 100% of the VAT on maintenance is reclaimable.

A contract hire car also eliminates the stress and responsibility of vehicle maintenance. In addition, business contract hire agreements can include access to courtesy cars or vehicles, ensuring that your team is always mobile. These services can be included in the contract or paid for as and when needed which is generally more cost effective.

How can I get the best deal for my contract hire vehicles?

contract hire

At Maxxia, we work with our clients to provide a bespoke vehicle leasing package, which maximises the benefits of contract hire.

We have a selection of business contract hire offers which are updated regularly, enabling you to browse available vehicle deals to choose the one that best suits your needs.

If your business ever dictates a need for extra temporary vehicles, short term hire can be arranged, enabling you to expand your fleet without the need to purchase and run more vehicles.

BUSINESS CONTRACT HIRE BENEFITS

Contract hire offers businesses a wide range of benefits including:

  • Tax-efficiency, with Corporation Tax and VAT advantages

  • Off-balance sheet funding for most organisations (read about the impact of IFRS 16 here)

  • Improved cash-flow and minimal capital expenditure

  • Fixed cost motoring and simplified budgeting for the entire contract period

  • Optional monthly maintenance covering all routine servicing costs

  • Reduced financial risk with no uncertainty over future residual values

  • No vehicle disposal hassles

  • Reduced in-house administration

  • Optional breakdown and replacement vehicle cover

  • Road Fund Licence provided for the duration of the contract

Find out how Contract Hire and Leasing could
help your organisation

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FREQUENTLY ASKED QUESTIONS

If you’re considering vehicles for business purposes, contract hire will give you the option of the use of vehicles you require without having to release large amounts of capital up front. From a business perspective, this brings valuable cash flow benefits and, because costs are fixed, also helps with budgeting. There are also potential VAT savings.

And because contract hire vehicles can come with additional services such as maintenance, you don’t have to worry about dedicating time and resources to servicing your business vehicles.

When it comes to organising a lease vehicle, it’s important to establish which type of lease is the best option for you.

There are different forms of business leasing available, including contract hire, contract purchase and finance lease. There are also some other models of vehicle finance that can be used to deliver car benefits to a wider employee base than just those eligible for a company car; examples are salary sacrifice and employee car ownership schemes.

At Maxxia we offer our clients the opportunity to blend several different models of car finance to achieve the best cost and employee benefit outcomes for their specific business needs.

Business contract hire deals tend to run over a period of between 24 and 60 months but other terms are available upon request. During a contract hire agreement, if you think that you’d like to extend the period this can usually be arranged with the leasing company. Short-term leases are also available through products like our sister company, CLM’s, Mini-lease.

With contract hire, at the end of your agreement you simply hand the vehicle back and are free to take a new vehicle of your choice on a new contract.

There are a few criteria that must be met for contract hire payments to be 100% deductible against company profits. These are:

  • The car must have CO2 emissions of 110g/km CO2 or less
  • The rentals must be evenly spread over the life of the lease, and
  • The lease cannot contain clauses that allow the company to eventually own the car.
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