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Contract Hire
Fixed cost motoring, without capital investment, Contract Hire can include the provision of routine servicing and maintenance, road fund licence, emergency cover, a relief vehicle, 24 hour roadside assistance and full accident management. In fact, all you need to carry on your day to day business without motoring worries. All you have to do is arrange insurance and fill up with petrol! With initial investment as low as three months advance rentals, you will know that your motoring costs are fixed for the term of the contract.
Contract Purchase
Contract purchase is a conditional sale agreement, structured as the user contracting to purchase the vehicle over a set period of time. It typically incorporates full maintenance (like contract hire). There is usually a final payment (ie a single large final payment) after which legal ownership passes to the user. In practice most users do not make a final payment, opting instead to return the vehicle to the finance company, thereby avoiding the burden of disposal. The repayment figures and the maintenance element are based on time and mileage. Like other purchasing schemes the vehicle is purchased inclusive of VAT and repayments do not carry VAT except for the maintenance element, of which 100% is recoverable.
Finance Lease
Although you will never own the vehicle, this option provides flexible financing for a minimum outlay and provides tax advantages. Monthly, quarterly or yearly rentals over the lease period (usually 2 - 4 years, depending on your mileage estimate) are significantly reduced because we are able to use the VAT exclusive price as the basis of calculation. We can also include "balloon" payment, to help you with cash flow. When the car is sold at the end of the lease, the proceeds (less a nominal sum), are refunded as a rebate of rentals. This rebate will attract VAT. During the agreement the car is classified as an asset, and the rentals can be offset against taxable profits. If registered for VAT, you can claim 100% of the tax if the car is used exclusively for business or 50% if it is used privately.
Lease Purchase
Similar to HP, and providing the same tax benefits, this method may help you with cash flow. Making regular monthly or quarterly payments, you can incorporate a final lump sum payment (a "balloon" payment) at the end of the term. You may then either make the "balloon" payment and own the car, or part exchange it using the balance after the final payment as a deposit on a new car.
Personal Contract Purchase (PCP)
Personal contract purchase, or pcp, is a conditional sale agreement, structured as the user contracting to purchase the vehicle over a set period of time. It typically incorporates full maintenance (like contract hire). There is usually a final payment (ie a single large final payment) after which legal ownership passes to the user. In practice most users do not make a final payment, opting instead to return the vehicle to the finance company, thereby avoiding the burden of disposal. The repayment figures and the maintenance element are based on time and mileage. Like other purchasing schemes the vehicle is purchased inclusive of VAT and repayments do not carry VAT except for the maintenance element, of which 100% is recoverable.
Vehicle Hire Purchase (HP)
The simple way to buy a car, after paying an initial deposit, is by paying equal monthly payments over a 1 - 4 year term, when the balance has been paid, you become the owner of the vehicle. No VAT is added to the payments and the interest is tax deductible. Classified as a company asset, the vehicle can be written down against your profits.
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