As a business owner you’ll know how important it is to provide decent perks and benefits to your staff. This is not just essential for employee morale, it is also used as an incentive to attract the best people to your company. However, you’ll also be well aware of how expensive all these added extras can be. When it comes to providing company cars to your staff it is particularly costly. P

Perhaps your business needs a fleet of cars and vans as part of its everyday operations. Whatever the purpose, contract hire can be a much cheaper alternative.

If your business is looking for a comprehensive, fixed cost motoring package where full usage of a new vehicle is important but ownership is not, then you should consider contract hire. This method of finance can be useful for companies wanting to free up credit lines or improve cash flow by implementing fixed cost fleet operation.

It is essentially an operating lease, which enables you to drive a new vehicle of your choice on a “fully inclusive” basis. Maintenance can be included as part of the contract, leaving you with only fuel and insurance to consider as extras. Since you are hiring the vehicle as opposed to buying it, at the end of the contract you simply hand the vehicle back, leaving you with no disposal worries (subject to mileage and condition).

Contract hire is also an extremely tax efficient method of funding a business vehicle, as rentals may be offset against taxable profits. For cars with a retail price of up to £12,000, full tax relief is available. However, where a car has a retail price in excess of this sum, tax relief is restricted in accordance with the formula known as “half the excess rule,” although full relief may be claimed on any maintenance element of the rental.

Furthermore, if your business is VAT registered, 100% of the VAT payable on the finance element of the rentals may be recovered where the vehicle is either a van or a car used solely for business purposes. Where the vehicle is a car used for business and private mileage, then only 50% of the VAT payable on the finance may be recovered, however.

At Toomey Contract Hire, we have a wide range of cars and vans available for contract hire. We are a privately owned vehicle finance and vehicle sourcing company and have over 15 years’ experience in the industry. Whether you are a small or large fleet company, or even a private individual, we have the finance package for you. Call us today on 01332 388090.