Business Contract Hire

Tax efficient finance for limited companies



Business Contract Hire is a fixed term rental agreement, where a set monthly fee is paid for the use of a car or van within pre-agreed parameters. It is one of the most popular forms of vehicle leasing and is often the most cost effective vehicle funding solution for VAT registered businesses of all sizes. There is also a personal version of this finance known, unsurprisingly, as Personal Contract Hire.

Key benefits:

  • Easy budgeting with a monthly payment that’s fixed for the entire contract term
  • Flexibility, with a contract term and mileage that’s based on your individual circumstances
  • Avoid unexpected bills by evenly spreading the cost of servicing, maintenance, breakdown and recovery
  • Eliminate depreciation risks with off balance sheet accounting

How it works:

When choosing to finance a car or van using a Contract Hire agreement, you are agreeing to pay a fixed monthly charge to a fleet leasing company who maintains official ownership of the vehicle and simply hires it back to you for an agreed contract term.

The key elements which affect the monthly rental price are the overall contract term (typically between 2 and 5 years) and the number of miles driven per annum. However, you can also choose to include additional options such as vehicle breakdown and recovery or servicing and maintenance.

Many companies choose Business Contract Hire because it is tax efficient for both the employer and the employee.

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