Contract Hire is available to Limited Companies, Sole Traders or Partnerships and offers the company fixed monthly budgeting with minimal outlay.
It is an extremely tax effective method of funding a business vehicle as the rentals may be offset against your taxable profits.
Additionally, if you are a VAT registered business 100% of the VAT on the monthly rentals may be reclaimed where the vehicle is either a van or a car used soley for business purposes. Where the vehicle is used for business and private mileage only 50% of VAT on rentals is recovered.
In the leasing industry the “normal” payment profile is 3 initial rentals in advance. A higher initial payment will bring the monthly payment down and a lower initial payment will higher the monthly payment.
Examples of initial payment.
If a business takes out a lease on a BMW based on a 3+35 payment profile at £350 +vat per month the total payment at the end of the lease will be £13,300 + vat (38 x £350 + vat). Some different initial payment profiles based on this example are as follows:
1. 3 Initial payments
2. Initial payment of £2,000 + vat – for customers who want a lower monthly payment
3. 1 initial payment – for customers who want to have a lower initial rental
Please note that the above examples are just for illustration purposes and to be used as a guideline – please obtain a written quote for all different payment profiles that you require.