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 What is contract hire and how does it works

What is contract hire?

With a Contract Hire facility, the vehicle continues to be owned by the leasing company and is hired to you for a set period of time and at a fixed monthly payment. This method of finance can be useful for companies with a growing vehicle fleet or for those wanting to improve cash flow by implementing a fixed cost motoring policy

How does it work?

The monthly rental charged is calculated based upon a number of factors. This includes the contract period, your anticipated mileage over the contract term and the estimated resale value at the end of the agreement. It is also takes into account service and maintenance costs (including tyres), together with any additional services required such as a relief vehicle. Under the Contract Hire agreement the funder retains ownership of the vehicle at all times and hence continues to absorb the subsequent risks, such as unforeseen running costs and uncertain resale values.

How is it accounted for?

Rentals paid on vehicles under Ł12,000 are fully deductible against corporation tax. However, for higher priced vehicles only a proportion of the payments can be offset. Where a vehicle has an element of private use then 50% of the VAT on rentals is recoverable, whereas service and maintenance elements of the rental are fully recoverable. Vehicles which are the subject of a Contract Hire Agreement are not recorded as assets on the balance sheet, thus improving company gearing ratios

What types of vehicle can TVAF supply?

All major manufacturers, to include Alfa Romeo, Audi, BMW, Citroen, Ford, Landrover, Lexus, Mazda, Mercedes Benz, Porsche, Renault, Toyota, Volkswagen and Volvo.

Hire Purchase

A traditional method of acquiring assets and still the most popular with most UK businesses. The asset is capitalised in the balance sheet with the client taking the risks and rewards of ownership. Enables the asset cost spread over a period of time, thus preserving working capital. Title in the asset rests with the lender until the loan is repaid


Thames Valley Asset Finance was established by Andy Wise, a local businessman with 17 years experience working in the UK financial services sector.
During that period Andy spent time working for a leading High Street bank and latterly for the UK’s largest asset finance company.
Thames Valley Asset Finance was subsequently set up to provide clients with a first class and highly personal level of customer service. This with unrivalled access to a range of finance products across the UK asset finance and business banking sector ensures we have the ability to deliver consistently and to a high standard.