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.