Business Contract Hire
Business Contract Hire (BCH) provides fixed monthly costs and removes the financial risk of ownership. For most businesses, the running costs of cars and light commercial vehicles represent a significant expense.
When you add the uncertainty of depreciation, it’s clear why Business Contract Hire is such an attractive solution. Whether managing a single vehicle or an entire fleet, contract hire helps businesses control one of their largest ongoing costs.
Features and Benefits of Business Contract Hire
Discover how Business Contract Hire can help manage costs, reduce risks, and provide greater flexibility for your fleet:
Fixed Monthly Costs:
Contract hire agreements involve a fixed monthly rental for the lease term.
- Simplifies budgeting as costs are predictable.
- Companies don’t face unexpected depreciation or resale value risks.
Tax Efficiency & Improved Cash Flow:
Lease payments are considered a business expense and may be fully or partially tax-deductible.
- VAT charged on the maintenance element can be reclaimed in full.
- Where there is some private mileage, 50% of the VAT on monthly payments may be reclaimed.
- Where a vehicle is used exclusively for business purposes, such as a pool car, 100% of the VAT is reclaimable.
No large upfront purchase cost is required; only the agreed monthly payments.
- Preserves working capital and supports other business operations.
Reduced Depreciation Risk:
The leasing company assumes the vehicle’s depreciation risk.
- Companies don’t need to worry about the vehicle’s resale value or selling the vehicle at a loss when the lease ends.
- Protects the business from market fluctuations affecting used car values.
Fleet Management and Flexibility:
Contract hire comes with optional services such as maintenance, servicing and roadside assistance.
- Leases can be structured for different durations and mileage limits to suit business needs.
- Reduces administrative burden.
- Optional maintenance and service packages allow businesses to accurately assess the vehicle’s Total Cost of Ownership (TCO).
- Avoid unexpected repair bills and keeps operating costs under control.
Access to New Vehicles:
Businesses can regularly upgrade their fleet to newer models, giving employees access to the latest safety, efficiency, and technology features—without the upfront purchase cost.
Simplified Disposal:
At the end of the lease, the company simply returns the vehicle, eliminating the hassle and uncertainty of selling or trading it in.
Business Contract Hire: Key Points
Early Termination
The cost to Early Terminate the contract can be expensive
Excess Mileage
Exceeding the contracted mileage will incur a charge for each additional mile
Insurance
The customer is required to hold fully comprehensive vehicle insurance
Fair Wear & Tear
Vehicles must be properly maintained and returned in good condition.
Initial Rental
Your initial rental can start from just one month in advance. The higher the initial rental, the lower the cost of subsequent monthly payments. While most customers typically pay the equivalent of three months’ rental upfront, increasing the initial payment further can help achieve a specific monthly budget.
Monthly Rental
Monthly rentals are determined by the vehicle type, initial rental amount, contract term, and mileage allowance. Contract terms range from 24 to 60 months, with longer terms generally resulting in lower monthly rentals.
End of Contract
At the end of the contract, you have two options:
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Return the vehicle: Collection is free from any UK mainland address.
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Extend the contract: Request a quote to extend for a further 6 or 12 months.
Your Yorkshire Fleet account manager will contact you six months before your contract ends to discuss your requirements. If you need a replacement vehicle, we will coordinate the collection of your current vehicle to coincide with the delivery of your new one.