Is Vehicle Contract Hire Right for Me? Howletts, Sudbury
|Author: Stacey Howlett||Published: 17th July 2014 11:57|
Is Vehicle Contract Hire Right for Me?
There are a number of issues to take into consideration when financing a vehicle, not only from an accounting point of view, but also from an ease of use perspective. This encumbers not only the day to day running, but also the ease of disposal at the end of the agreement.
The accounting bit – as a general rule, for cars with CO2 emissions up to 130g/km lease payments can be fully offset against profits. This can make leasing highly attractive. In most circumstances the monthly payments are taken by Direct Debit.
There is also the question of ensuring the mileage is adhered to, otherwise excess mileage penalties can apply.
Maintenance is also an area of concern in any business with vehicles, leasing with maintenance can take away the unpredictability of unforeseen service bills giving peace of mind and total budgeting. Road Fund Licence is generally included for the full term of the agreement.
Once a leasing arrangement is in place, a qualified accountant will then be able to provide specific company car tax advice about other elements of car usage that are tax-deductible.
It is worth remembering that the car remains the property of the leasing provider at all times, and it is therefore in everyone’s best interest to keep the vehicle in the best possible condition.
At the end of the lease, the car will be subject to ‘fair wear and tear’ evaluation. If the car is considered to be in poor condition, rectification charges may be applied. As the vehicle is contracted to a set total mileage it is worthwhile putting in place an annual check to ensure the mileage is not in excess on a pro rata basis. Some lease companies offer the facility to alter contracts midterm to avoid excessive mileage charges at the end of the agreement.