Business contract hire explained

1. Full details of business contract hire

Business Contract Hire is a tax efficient funding method where you hire rather than own the vehicle, paying fixed monthly charges for the duration of the contract.

Business Contract Hire delivers 'off balance sheet' accounting and reclaimable VAT, and can help increase cash flow to assist in the smooth running of your organisation.

Under a Business Contract Hire agreement we retain ownership of the vehicle at all times and therefore continue to absorb all of the subsequent risks such as unforeseen running costs and uncertain resale values.

To find out if Business Contract Hire would suit your organisation, call us now on 0870 224 2772 and we can help you make the decision that's right for you.

2. Key benefits of business contract hire

• Business Contract Hire means that VAT is recoverable on monthly rentals
• Business Contract Hire allows for accurate monthly budgeting
• Business Contract Hire provides improved cash flow
• Business Contract Hire ensures you have a minimum capital expenditure
• Business Contract Hire provides a fixed interest rate
• Business Contract Hire means that rental is allowable against taxable income
• Business Contract Hire means that VAT is chargeable on rental
• Business Contract Hire means that VAT is recovered on purchase cost by Network and passed on to customer in lower rental
• Business Contract Hire means that there are no depreciation risks
• Business Contract Hire means that there are no vehicle disposal problems
• Business Contract Hire provides reduced administration
• Business Contract Hire provides on-going advice/support
• Business Contract Hire means that road fund license provided
• Business Contract Hire provides breakdown rescue cover
• Business Contract Hire provides a replacement vehicle in case of breakdown
• Business Contract Hire ensures fixed charge maintenance
• Business Contract Hire means that VAT is chargeable on services
• Business Contract Hire means that VAT is recoverable on services
• Business Contract Hire provides optional GAP insurance

3. Your options at the end of the contract

Do you want to purchase the vehicle?

Request a purchase price from your Netowrk franchisee. Please remember that the vehicle cannot be purchased by the company that hired it, any associated company, a Director or member of their family.

If the price is acceptable to you, please confirm your intention to purchase and send your payment to your Network franchisee.

If the price dos not fit your budget, go back and say NO.

Do you want to return the vehicle?

Contact your Network franchisee to arrange collection of the vehicle. Please note that 72 hours notice is required.

When the vehicle is collected from you, ensure you get a copy of the hand-over appraisal form.

If you have exceeded the contracted pro-rata/total mileage indicated in your contract, excess mileage will be charged at the agreed 'pence per mile' rate.

 

You can request an extended hire period.

Formal Extension

By contacting your Network franchisee you can request a 3,6 or 12 month extension.* You will receive a formal quotation. If the quotation is acceptable, sign the form and return it to your Network franchisee. They will then get documentation to cover this new period drawn up for you to sign.

At the end of this extension period, you are back at the start of this process and will probably wish to return the vehicle to your Network franchisee.

 

Informal Extension

You may continue to run the vehicle on at the current contract rental for a period. However, we have the right to request the termination of this hire at any time, and if maintenance is included, we have the right to remove this at any time.

At the end of this period, you have the option of purchase or return. Please return to the beginning of this flow chart.