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Contract Hire (CH) / Operating Lease (OpLease)
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 solely for business purposes. Where the vehicle is used for business and private mileage only 50% of VAT on rentals is recovered.
- Fixed cost allowing easy budget management
- Low initial outlay (usually 3 rentals in advance)
- No responsibility of vehicle disposal
- This form of funding is considered to be ‘off balance sheet’ and the vehicle will not be shown as an asset within your balance sheet
- VAT registered business can reclaim 50% of the VAT on the contract and 100% of the VAT on any maintenance element
- No depreciation risk
- Finance company carries Residual Value Risk
- Ability to change for a brand new vehicle on a regular basis