Summary

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.