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Business Users

Contract Hire

How does it work?

The funding of company vehicles, regardless of fleet size, can be a significant drain on financial and human resources, especially at a time when resale values are increasingly volatile. Contract hire can remove both the financial and administrative burden from your business.

It can deliver a tax-efficient form of funding which eliminates risk and smooth’s cash flow.

Your company hires a vehicle from us for a pre-determined period at a fixed monthly rate. The finance house retains ownership and at the end of the fixed period the vehicle is simply returned to us. The single, fixed monthly rental takes into account the cost of the car, its rate of depreciation, the length of the contract, mileage and any additional services you may wish to build in. The majority of our customers choose to include maintenance cover, with full RAC breakdown and recovery service, keeping drivers on the road without involving the company in complex or costly administration.

The benefits:

  • Low initial payment, typically equal to 3 monthly rentals.
  • The economies of scale available from a supplier which is purchasing a great many vehicles a year.
  • Currently off balance-sheet funding as all ‘risk and reward’ remains with the finance house.
  • Rental allowances typically provide accelerated tax benefits.
  • We reclaim the VAT on the purchase of the vehicle, and pass that saving on to you in the form of lower monthly rentals.
  • Removes disposal risk and protects your future profits.
  • A maintenance-inclusive contract will remove the inherent risks associated with running a fleet of vehicles.
  • Your monthly fleet outgoings are fixed and incorporate realistic running costs, giving you greater budgetary control.
  • Improved gearing.
  • Lines of credit can be better utilised for investment in your core business.
  • Flexible contracts to reflect the changing nature of your business.
  • Peace of mind.

Personal Contract Purchase (PCP)

How does it work?

Many companies are now looking at the benefit both to the business and to their drivers of offering an alternative to the company car. An obvious solution is an additional cash payment to the driver for them to provide their own vehicle for business use. However, this can bring with it an amount of uncertainty and introduce problems for those drivers accustomed to running a fully expensed company vehicle.

Personal Contract Purchase (PCP) offers your drivers all of the benefits they associate with a company car, without the personal tax burden. An integrated PCP package can ease the driver’s transition from a company vehicle to one of their own.

The benefits:

  • The driver can enjoy all the benefits of having a company car, including maintenance and servicing, breakdown cover and insurance, all included in one monthly payment.
  • We form a contract directly with the driver so you are not responsible for the arrangements, nor the administration or guaranteeing any of the costs involved.
  • Your driver will enjoy lower interest rates and a lower initial payment than they would typically find elsewhere.
  • The driver will benefit from our considerable purchasing power.

Finance Lease

How does it work?

A Finance Lease can be a cost-effective way of funding vehicles, having similar VAT and Corporation Tax benefits to Contract Hire, but the risk and responsibility for resale at the end of the term remains with you.

The benefits:

  • Low initial payment (several monthly rentals).
  • Interest rates are usually fixed (but can be variable).
  • Rentals can usually be offset against taxable profit.
  • Your capital outlay is reduced as VAT is reclaimed by the finance house and passed on in the form of lower monthly rentals. However, the following must also be considered:
    • In most cases the whole cost of the vehicle is fully spread over the life of the contract, potentially leading to higher monthly repayments.
    • The risk on resale lies with your company, so with an increasingly volatile used car market your future cash flow could be at risk.
    • Additional services such as maintenance and RAC cover are not included, therefore internal fleet administration resources may be required.
    • The additional cost of any third party fleet management must be taken into consideration.

Contract Purchase

How does it work?

If your company is restricted in the amount of VAT it is able to reclaim, or you have several expensive (typically in excess of £25k)* cars in your fleet, it may make financial sense to retain ownership of your vehicles. This, however, exposes your business to all of the risks inherent in administering, maintaining and particularly disposing of a fleet.

Contract Purchase offers all the operational, managerial and administrative benefits of Contract Hire, together with the tax-efficient benefits of ownership, such as the ability to claim capital allowances.

  • Your company enters into a finance agreement for the vehicle for a pre-determined period at a fixed monthly rate.
  • You have the option to buy the vehicle when the contract is up by making a final ‘balloon’ payment, agreed at the start of the term. Alternatively you can return the vehicle to us, sharing in any sales profits but with possible money to pay should we only be able to sell the vehicle for less than the balloon payment.
  • The single, fixed monthly payment takes into account the cost of the car, its rate of depreciation, the length of the contract, mileage and any additional services you may wish to build in.
  • The majority of our customers choose to include maintenance cover, with full RAC breakdown and recovery service, keeping their drivers on the road without involving the company in complex or costly administration.

The benefits:

  • Low initial payment, typically equal to 3 monthly finance payments.
  • The economies of scale available from a supplier which is purchasing many vehicles a year.
  • You retain the tax benefits of ownership throughout the contract, with the option to take full legal ownership at the end.
  • Removes disposal risk and protects your future profits.
  • A maintenance-inclusive contract will remove the inherent risks associated with running a fleet of vehicles.
  • Your monthly fleet outgoings are fixed and incorporate realistic running costs, giving you greater budgetary control.
  • Lines of credit can be better utilised for investment in your core business.
  • Flexible contracts to reflect the changing nature of your business.
  • Peace of mind.
  • This is a brief outline of the most common forms of business finance, but as individual needs vary greatly, advice should be taken from your own accountant to ascertain suitability