IF more than half of all new company cars registered each year are funded using contract hire leasing, then there must be some benefits that come with it.

You’re probably wondering why, and what it is, but it’s quite simple.

A vehicle is leased to an organisation for a set time and specified mileage, in return for an initial deposit (usually between three to six months’ rental) and a subsequent monthly charge. At the end of the contractual period, it is returned to the leasing company.

Because the car is owned by the leasing company, a contract hire vehicle does not have to be shown as an asset on your balance sheet. Some or all of the rental charge can be offset against your company’s taxable profits. Which makes car leasing very tax efficient.

If you choose to contract hire with maintenance, aside from having tax efficient advantages, up to 50% of the VAT on the lease is recoverable (assuming some private mileage, which is the case for the majority of all leased cars).

And, you can also claim back 100% of the VAT on the maintenance element, if you do choose to take out a maintenance contract with contract hire lease agreement.

Leasing a car with a maintenance agreement removes risk of business car ownership, including depreciation, servicing cost and eventual sale.

You also have access to the bulk buying power of the leasing company, so you can benefit from lower monthly rentals on the car lease.

At the end of the agreement the car is returned to the leasing company. As long as the vehicle has been cared for, and you have not gone over your agreed mileage, that’s it.

Time to lease a new car!

Lease restrictions – find out how much you can save click here