This topic covered Contract Hire.

  • It is a tri-partite transaction involving a supplier (dealer), lessor (lender) and lessee (customer).
  • Contract Hire is a method of funding the use of a vehicle for a set period of time but not the ownership of it.
  • The rentals cover the depreciation of the vehicle and interest costs only during the primary period of the lease.
  • The interest is calculated on the ex-VAT price of the vehicle.
  • The rentals attract VAT at the current rate.
  • Contract Hire agreements can be both regulated and unregulated depending on the nature of the customer and the total amount of rental payments.
  • Contract Hire is applicable to private and business customers. However, as the rentals attract VAT, Contract Hire has the greatest benefit for VAT registered companies.