The announcement included the abolition of the fuel duty escalator which has lead to fuel prices rising at a rate above inflation. This has been replaced with a ‘fair fuel stabiliser’ meaning that petrol prices will only increase at the rate of inflation despite the yoyo’ing price of oil. 

The Government also revealed their plan for if and when oil prices drop, they will change the stabiliser rate to around 20% keeping fuel at a fair and affordable price while oil costs are low.

This will take affect once prices dip to $75 (£46.88) a barrel, a price which the Government think is fair. Experts however have criticised this move saying that although on the face of things the public will see fuel prices being lowered the increase of tax on oil and gas resources in Scotland could end with the Government playing a dangerous game with oil giants.

Plans to increase fuel prices by 4p per litre have been put back until 2012 but this also coincides with plans to increase the tax on company cars.

As a business car leasing may still be the best option as many leasing companies include costly services and certain repairs as part of their payment plans. As a registered business you are also entitled to claim back up to 50% VAT on vehicles, meaning that now more than ever is it a good idea to look at leasing a vehicle.

Source – FleetNews

The announcement gives a 10% reduction in inheritance tax if a donation of the same is given. The charity hope that this will increase legacy donations from members of the public.

David Main, BEN Chief said:

“Although the benefit to charities of such legacies are likely to be long term, the simplifying of the rules relating to Gift Aid is of more immediate help and will enable charities like BEN to maximise the monies they derive from the generosity of those who donate.”

BEN benefits almost 1 million people across the country every year with its five residential day centres and by their own admission had been worried about planned legislations for ‘gift aid’.

Mr Main added:

“BEN is already beginning to feel the impact of public sector cuts as many local authorities freeze and in some cases reduce the funding of residents in our care centres.”

As the official charity of the industry BEN offers financial, mental and physical support to workers and their dependents should they be in trouble, over the years they have helped mechanics, production line workers and businesses in the contract hire trade.

The charity recieved also recieved a boost earlier this month when it was revealed that almost all of the top ten dealer groups support BEN and its work.

Source – CarDealerMagazine

Monthy Cost
The monthly payment is normally the buying price of the car minus the residual value after the contract hire period, divided by the relevant months and c of course some profit and interest added on.  The key figures are the residual value and any interest figure.  In short, the reason why many German cars are bought through contract hire are that they hold their value so well, to the pint it can be cheaper to drive a BMW that other cars that are cheaper to buy, but don not hold their value well.

Taxation To The Business
Most businesses can set the cost of the contract hire as a business expense, but the make and model of the vehicle can determine how much can be claimed back.  If the car lease vehicle is to be used privately, then only 50% of vat can be claimed. Then if the retail price of the car is above a certain amount, then you may only be able to claim a percentage of the monthly cost back.

Personal Tax
If you have a contract hire car as a company car, then you may be liable to personal tax on that vehicle.  Unlike many years ago, personal tax is based on the C02 emissions of the car and the retail price of the car. The co2 emissions tell you what percentage of tax against the value of the car you will be charged.

We have deliberately left out exact figures here as everyone’s tax situation and car variations will be different, but most will have to consider the 3 options above before they consider contract hire.

Advantages of contract hire:
1.    You do not have to pay an exorbitant amount of money car lease, unlike when you make a purchase.
2.    You remain unaffected by the depreciating value of the vehicle. Any fluctuations in its prevailing market rate will not affect you.
3.    If you are someone who likes changing cars frequently, then contract hire is the ideal platform for you to rent and drive new cars over a span of 1-3 years.
4.    You do not have to worry about the maintenance of the car.

If you have always dreamt of having a car, but your limited means never allowed you to make the purchase, then contract hire is the method which will make your dream come true. In present times, having your own vehicle is more of a necessity rather than a luxury. It is difficult to imagine a daily routine without having a car. Imagine what would you do in the case of an emergency? If someone in your family is critical and needs to be immediately hospitalised, and you don’t have your own vehicle, then the delay caused in arrival of ambulance could be crucial.

Following points are helpful in understanding how contract hire works:
1.    Search for the right deal: Internet is the best source to locate various companies offering cars on contract hire basis.
2.    Discuss your requirements: Discuss about the kind of a car you are looking for; hatchback, SUV or a high end luxury model, duration for which you plan to use it, contract fees and usage terms.
3.    Payment plans: Different companies use different payment plans in order to maintain a competitive edge over the other. Payment plans are usually segment specific, i.e. cars falling in a particular segment will have similar payment plans. It also differs with respect to late returning of the vehicle, over limit of mileage usage and damage caused during the lease period.
4.    Compare: Get different quotes from various companies to see what suits you the most and proceed with the company that is offering you the best deal.

Contract hire offers various benefits which makes it a preferred choice not only for individuals who wish to procure a car for personal use, but also for businesses who want to have a vehicle for business purpose.

Summary- Contract hire enables you to have a vehicle on payment of monthly rentals for a fixed duration of time. To get a vehicle through contract hire, search for the right deal, discuss your requirements with the company, see various payment plans which are offered and compare quotes given by various companies before choosing the one that suits your requirements the best.

By guest blogger Atul

Clearway has chosen Citroen contract hire in the form of the C3 branded in their own colours. It is these cars that thiee taking driving instructor training in Stockton will use through their course, but possible will also continue to use when they are qualified as a driving intructor. So it often ends up with students learning to drive with clearway are in fact learning to drive in Citroen contract hire car, especially chosen becuase it is easy for learners to drive.

Many instructors also then choose to use contract hire to keep what is in fact their business on wheels, keeping funding and cashflow positive and only have to worry about monthly payments, petrol and insurance.

They have created the Leasebam system that does not have published prices but only responses from contract hire firms. Here is the video.

But as hiring out home appliances has just about gone away, contract hire for cars has not, especially for business owners and often for employees also. There can be good reasons for this, for example keeping money in the business. If you add up the total cost of a car used through contract hire or one bought outright, in most cases it would be cheaper to buy. But this is not the end of the story because a business has to decide what it can do with that money should it stay in the business and choose to hire instead.

A £25000 purchase of a BMW for instance may cost a few grand more by opting for contract hire, but that 25 grand could produce a lot more money or left in the right business to grow or invest. For other business owners this money could be the cash flow that keeps the business turning over. So contract hire can have a greater value than just simple monthly payments.

A main factor of contract hire is its value after the contract hire period is up. Certain cars obviously have less depreciation and in theory these should be the cheapest cars for a contract hire deal. But it is also worth comparing the interest payments on the contract as this can make the biggest difference in month payments.

Another factor is buying power, there are some contract hire firms that buy so many cars that they get huge discounts only to pass these on to customers, in fact some claim their monthly premiums are based on the cost price of a car, as they can make their profits through the bonuses paid out from car manufacturers.