What is Contract Hire ?
With Contract Hire you rent a vehicle for a fixed period, with the inclusion of an inclusive maintenance contract for the term of the lease based on the length and mileage agreed at the outset.It is fixed for the term and you have no exposure to market conditions for your contract period. Essentially, you are buying an inclusive service package on top of the use of the vehicle.
Contract Hire agreements normally include maintenance packages which can contain servicing, roadside assistance, tyres,and road tax and government tests for the period of the lease term.
Contract hire is very popular with companies for both private and commercial vehicles as they are off balance sheet and can be tax efficient. Once you are Vat registered you can claim back 100% of the VAT on all commercial vehicles while on a private passenger vehicle once you are registered for Vat you can reclaim 20% on the Vat element of monthly lease. Vat on the maintenance contract is 100% reclaimable on both commercial and passenger vehicles Benefits of Contract Hire are a fixed monthly repayments, a maintenance option, lower initial outlay/deposit and no depreciation risk on the vehicle for the company.
At the end of the contract hire agreement the vehicle is simply returned to the Leasing provider.
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