Would you like a tax efficient way of funding?

Once again, contract hire is a very tax efficient way of funding your company vehicles.

Your business can claim 100% of the rentals against Corporation Tax for cars with emissions anywhere up to 130g/km – it is 85% for vehicles with CO2 emissions above the 130g/km mark.

Is cash flow important to your business?

Contract hire is also kind to your cash-flow as initial payments are typically lower than if you take out a hire purchase agreement, where the deposits are usually around 10%.

Typically, the initial payment is 3 or 6 payments in advance plus a finance company documentation fee if applicable.

In addition, as you are not funding the capital cost of the vehicle itself, the monthly payments are also lower. In theory, you are funding depreciation (which you stand to lose anyway if you own your company vehicles) so the rentals are much less than a standard HP agreement.

Sometimes, the monthly rentals can even beat depreciation; due to bulk-buying discounts and manufacturer incentives, contract hire monthly rentals can represent excellent value for money if you manage to secure a good deal.

How much do you value your time?

Time is money, we all know that. And managing company-owned vehicles, especially if they are not new, can be very time consuming and costly for any SME.

Contract hire is a good way to maintain your company vehicles which will require less maintenance and less time-out managing the day-to-day running of your company cars.

In addition, maintenance contracts are often excellent value for money – once again, you can save money taking out a maintenance contract compared to funding it yourself due to the funder’s buying power.

If you contract hire a vehicle your chosen funder will source the vehicle for you, taking the hassle factor out of the vehicle location process.

Access to large fleet discounts on company cars

Finally, it is unlikely that any one small to medium business enterprise will be able to negotiate the discounts that a major lender will, however good you think your bargaining skills. Small fleet leasing companies have access to funders who get the large discounts on company cars and these are passed down to you in the form of reduced rental costs.

Jeff Reed, a contract hire expert and one of the partners of small fleet leasing company Renascence Vehicle Leasing, said;

“Post-recession, companies are realising that fixing the cost of their motoring is essential and cash-flow high up on many agendas.

“The day-to-day running of company-owned vehicles is not only time-consuming, it can be costly and tie up money unnecessarily.

“Contract hire is also a VAT and tax efficient way of funding a new company vehicle and in a lot of cases, it is cheaper to lease than to buy when depreciation is taken into account.”

The benefits of contract hire

• VAT efficient
• Tax efficient
• Time efficient
• Eases cash flow
• Access to fleet discounts on company cars