Business Contract Hire

Contract Hire is a UK term used to describe the rental of a vehicle, a longer term rental though usually of 2 years. The Contract Hire and Leasing is very big in the UK and a considerable industry sector.

Due to company funded vehicles for business or perks the UK Contract Hire industry is arguably the best managed and most successful worldwide.


There is a representative body to the industry and that is the BVRLA (British Vehicle Rental and Leasing Association – which set the standards for operational quality and seek to look after the interests of both the daily hire and contract car leasing sectors.

There are close to 2 million vehicles with BVRLA membership under management in the UK.

You can find brokers that will sort out contract leasing for you, they will find the lowest cost leasing supplier for you (make and model) and they will add a margin which will be added to the customers rental. However 85% of all automotive purchases are now researched online and this figure is likely to keep on growing and growing.

The companies that rent these vehicles to business users usually include a repair and maintenance plan for the period of the Contract Hire. The company renting the vehicle will never own it, the vehicle will always remain property of the Contract Hire Company.

Contract Hire is available to Limited Companies, Sole Traders and Partnerships, it is an extremely popular choice for companies that are VAT registered. Over 40% of VAT registered companies choose this method of funding. Reduced administration and Tax advantages help the businesses meet their vehicle requirements on their budgets.

Contract Hire Advantages

Taxation and Finance Benefits

  • Monthly budgeting remains accurate.
  • It can improve cash flow.
  • Contract Hire has fixed interest rates.
  • It is off the balance sheet.
  • It is allowable against taxable income.
  • On monthly rentals the VAT is recoverable.
  • No risks with regards to depreciation of the vehicle (This remains with the Contract Hire Company.

Benefits of Vehicle Running

  • You will always have ongoing advice and support.
  • You will receive reduced administration.
  • You do not have to worry about the vehicle disposal (This will remain the problem for the Contract Hire company).
  • For the duration of the contract vehicle excise duty will be paid (This is the Road Fund Licence that will be provided).
  • You may take up an optional maintenance package, optional Breakdown Rescue cover, Optional GAP insurance and incase of a breakdown you may also take out optional replacement vehicle cover

GAP Insurance is a safety method incase the vehicle under contract is declared a write off, this provides cover for the shortfall between the insurance value and the outstanding finance. It is also known as Lease/Loan payoff coverage. So if it comes to the point where the insurance company come to the decision that the vehicle has become a write off the remaining finance you owe will be covered.