If you run a business that has several staff vehicles which you have purchased through the firm you might not have heard about corporate leasing car hire. If you had then you would probably have already changed your ways. You see, there are lots of benefits to leasing cars that far outweigh any disadvantages. There are some tax allowances involved that can lower a tax invoice. Sometimes VAT can be claimed back too. The money that you save on purchasing cars can be used to expand the business in other ways. These are all very good reasons why you should consider swapping to a corporate leasing car hire agreement. The only question is what type of agreement is best for you?
One of the simplest methods is contact hire. Your company pays a fixed monthly amount for a predetermined term on the vehicle of your choice. Prices are calculated on the amount of extras that you require included in the deal, such as maintenance and tires, the amount of mileage that the vehicle is expected to do and the depreciation value of the car. After the contact expires you give the vehicle back to the leasing company.
These types of agreement are good for company cash flow as smaller deposits and fixed payments are all that is needed. They also help lower the cost of overheads that are associated with running company vehicles. There are sometimes VAT and tax benefits involved with these deals.
However, they do not allow you to purchase the car at the end of the contact and if you exceed the mileage quota then you might incur a fine. You also need to make sure that the vehicle has a fully comprehensive insurance cover – http://www.hmrc.gov.uk/.
So if you run a company that likes to keep a fairly new range of vehicles without the initial capital outlay then this might be the deal for you.
Another popular method of corporate leasing car hire is contract purchase. This is similar to contract hire, but at the end of the contract you get an option to buy the vehicle or extend its period of hire. Or you can give the vehicle back to the leasing company. When this type of agreement is made you will agree a fixed monthly rate for hire and also a minimum amount that you can pay to buy the car after the lease term ends. You can also include all of the extra services that are available with contract hire.
This is a good idea because the vehicle is shown as part of the company’s assets, albeit a depreciating asset, which allows some of the cost to be claimed back. The agreed upon price for the car at the end of the contract term means that the risk of depreciation is nullified as if the car is worth less than originally thought it can be given back to the leasing firm.
However, with this type of agreement it is not as easy to claim the VAT back, but it is useful for companies that want to show their vehicles on the books and avoid the dangers of depreciation.
These are the two most popular options for companies that want to take advantage of corporate leasing car agreements and whilst there are other options available it might be worth researching these first.
