Business Contract Hire

Business Contract Hire Explained

What is business contract hire?

Business contract hire is a popular long-term vehicle rental agreement suitable for sole traders, partnerships and limited companies.

It’s a particularly popular option for VAT registered companies, as they can claim back 50% of the VAT for the supply of the vehicle.

How could it work for your business?

If your company leases a vehicle on a contract hire basis, you will pay to rent the vehicle in monthly instalments for a contract of 24 or 48 months, for example. Once the contract is up, the vehicle is returned to the leasing provider, leaving them to worry about depreciation values and disposal of the car or van.

Contract hire means your company can concentrate on its core activities, while avoiding the financial risk and administrative burden of owning your vehicle or fleet.

The key features of business contract hire

  • Lending provider remains the owner of the vehicle, meaning the vehicle appears ‘off the balance sheet’ of your company
  • Fixed monthly rentals cover the rental of the vehicle, plus any maintenance options if chosen
  • The monthly rentals are calculated by taking the following into consideration:
  • The cost of the vehicle
  • The contract period
  • Anticipated residual value of the vehicle (how much the vehicle is likely to be worth at the end of the contract)
  • Mileage allowance (as chosen by you before the start of your contract)
  • Any additional options, such as a maintenance contract
  • Vehicle tax is provided for the full term of the contract

The key benefits of contract hire for business

  • Low initial rental
  • Fixed rentals for the whole package, making budget planning easier
  • Flexible terms to meet your company’s requirements, with variable contract duration and mileage terms
  • Contract hire removes depreciating assets from your company’s balance sheet, and the associated risks of owning vehicles, such as depreciation and disposing of the vehicle
  • Maintenance of vehicles can be included in the monthly fees, spreading the cost
  • Flexible invoice arrangements help to considerably reduce administration
  • If yours is a VAT registered company, you can claim back 50% of the VAT on the finance element

What happens at the end of the contract?

At the end of the contract, the vehicle is returned to the leasing provider, meaning you are then free to hire another vehicle or vehicles, without any financial obligation.

If you have exceeded your agreed mileage, an excess mileage charge will be payable, worked out on a ‘pence per mile’ basis as set at the start of your contract.

When returning your vehicle, it will also be assessed according to the BVRLA Fair Wear and Tear guidelines. Any damage that falls outside of these guidelines may be subject to end-of-lease penalty charges. For more information on this, visit our Fair Wear and Tear guidelines page.

Frequently asked vehicle leasing questions

We have listed some of the most commonly asked questions about personal and business leasing and contract hire, all of which can be found below. If you can't find the answer you are looking for, then why not get in touch and speak to a member of our sales team on 01332 300 044.

All of the lease vehicles that we source are brand new and supplied through vehicle manufacturers or UK franchised dealerships.

Yes, all our vehicles that are supplied to you will come with full UK manufacturer’s warranty. Each manufacturer sets its own warranty length, so it is advised to speak to a member of our sales team to discuss the warranty details for your chosen vehicle.

An initial payment is typically a payment of 3 regular monthly rentals made payable in advance. Larger initial payments can be made if desired, for example 6 regular payments. This will in turn lower the regular monthly rentals throughout the duration of the contract.

Maintenance is not included in all our lease contracts. If maintenance is included it will be clearly stated on our website. However, if you require maintenance, you can add this on to your lease package for an extra monthly cost. All our maintenance packages include servicing, exhaust, tyres, brakes, battery and labour. For more information, please go to the maintenance section of our website.

Yes, road fund licence (road tax) is included for either 12 months or for the duration of the contract depending upon the type of lease agreement taken out.

If you have taken out a personal or business contract hire agreement, your road fund licence will be provided to you for the duration of the contract by the funder. This is because the funder is the registered keeper of the vehicle.

If you have taken out a contract purchase, personal contract purchase, finance lease, lease purchase, business or personal operating lease, the funder will only provide you with road fund licence for the first 12 months as you are the registered owner of the vehicle.

Yes, every contract lease deal that we source comes with either 12 months or 3 years breakdown recovery, depending upon the manufacturer of your vehicle. If you would like confirmation about roadside assistance, please call 01332 300 044 and speak to a member of our sales team.

All your monthly rentals are collected by direct debit by the finance funder who you have taken your lease agreement out with and not Motion Vehicles.

If you are leasing a vehicle for business purposes and your business is VAT-registered, then you can reclaim 50% of the total payments made. If maintenance is included within your lease agreement, you will also be able to claim back 100% of the maintenance costs.

Any business customers who are not VAT-registered such as sole-traders, will not be able to claim back VAT or maintenance costs.

You can generally recover the VAT on all other business motoring expenses like fleet management or off-street-parking. There are specials rules for reclaiming VAT on road fuel used for business purposes, so it is advised to speak to your accountant for more information.

Below is a link to the HM Revenue & Customs website which provides a company car and car benefit calculator to calculate how much company car tax you will pay.
Company car and car fuel benefit calculator: http://cccfcalculator.hmrc.gov.uk/CCF0.aspx

No, we offer free UK mainland delivery and collection for all our customers.

Once you have chosen a vehicle, contract type, advanced rental and annual mileage, you will receive a written quotation from a member of our sales team. The quotation will detail your chosen parameters and will confirm your monthly rental.

If you are happy with the quotation, you will be asked to fill out a credit proposal form, which will be used to gain credit from the finance company for the vehicle you wish to lease.

Once approved for credit, a vehicle order form will be produced and will need to be signed by yourself and returned to us. This form will confirm your quotation, vehicle details, colour, options and approximate lead time for the vehicle. Following its return, we will send the order form to the dealership involve to either secure your vehicle if in stock or to initiate the factory order.

Finance documents will then be produced by our admin department, sent to you, where you will need to read, sign and sent back to us along with your administration fee payment. From here, you will simply wait for you vehicle to be delivered.

For a more detailed step-by-step guide to the leasing process, visit our how leasing works section.

If you would like to discuss mileage amendments, extensions or update your personal details during your contract, please contact our customer service team who will be able to assist you. You can reach our customer service team by calling 01332 300 044.

All you need to do is simply hand your vehicle back where you will have no further obligations. Upon collection, please ensure that the vehicle is in a reasonable condition. If it's not, you will be charged for any damage.

No, insurance is not included within your monthly rental. It is your responsibility to insure the vehicle you lease for the duration of your agreement.

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