Business contract hire is a form of leasing which works much like a long-term rental. Here, the leasing company provides the business with a car, van or multiple vehicles in return for a fixed monthly payment. One of the contract terms will be the allowance on mileage allowed on the leased vehicles.
Businesses can choose a lease term extending from a year to up to five years. At the end of the lease term, the vehicle(s) can be returned and new ones can be leased. Business contract hire allows businesses to stay competitive in terms of motoring costs and plan their budgets better. Besides monthly lease payments, business will only be required to buy insurance and pay towards fuel costs.
Business contract hiring also offers businesses significant tax advantages. When a company buys a car, then the vehicle is viewed as a company asset and taxed. The costs of acquiring vehicle thorough a contract hire are not viewed as balance sheet costs and not tax liable.
As the leased vehicles are covered under factory warranty, the associated repair and maintenance costs are also less. The costs benefits of contract hire have made this a much preferred leasing option for many businesses.