Contract Hire (CH)
Contract Hire is essentially a long term car rental contract paid on a monthly basis over an agreed term; usually 2, 3 or 4 years. Contract hiring a vehicle can offer both non-maintenance and full maintenance contracts. A full maintenance contract is where the finance provider is responsible for maintaining and servicing the vehicle and includes all costs due to fair wear and tear.
For those business� that are VAT registered, a proportion of the rentals may be tax deductible. Contract Hire is also classified as an operating lease for taxation purposes, and is therefore regarded differently to "purchase" contracts so the business may benefit from certain other tax advantages.
Contract Hire is calculated based on an initial deposit payment, (usually equal to 3 months of rental) and the annual mileage of the customer.
Benefits of Contract Hire to business':
- Gain an additional credit line.
- Can reclaim the VAT on 50% of their payments and on 100% of their maintenance package costs.
- Run vehicles that are not recorded in the Balance Sheet but on the Notes to the Audited Accounts.
- Can claim Hire Rental Tax Allowances.
Historically manufacturers tend to introduce price increases around the first part of the New Year. We would strongly advise our customers to place their orders early to protect themselves from any potential price increases and to ensure an early 2010 registered delivery.
