Westover Nissan Contract Hire Explained: Salisbury, Dorset

Non-Ownership: Personal Contract Hire

The customer pays a fixed monthly rental which is based on annual mileage. The car is simply handed back at the end of the agreement, subject to mileage and condition. Rentals are inclusive of VAT.

Benefits:

  • Poole, Salisbury, Dorset, Wiltshire, National contract hire and leasing discounts
  • Fixed monthly rental based on mileage and length of term
  • Rentals include VAT
  • Can include full maintenance package
  • Chance to have a new car every 2-4 years
  • Low initial outlay
  • No residual or dispoal worries

Ownership: Van/Vehicle Lease Purchase

A product for business users where a portion of the capital cost can be deferred until the end of the agreement, known as a balloon payment, or residual value. In effect this reduces the payments or shortens the agreement. The balloon payment remains the customers responsibility and must be paid in full when it is due. There is no guaranteed future value with this agreement.

Benefits:

  • Low initial outlay
  • Lower monthly payments
  • Eventual ownership

At the end of the contract the customer has the following options:

  • Pay the balloon figure and keep using the car by paying an annual rental equivalent to 1% of the original cost + VAT until disposal (this is commonly known as peppercorn rental).
  • Sell the vehicle to an independant third party and keep 95% of the sales proceeds over the amount of the balloon payment.
  • If the sale of the vehicle does not cover the balloon figure, customer is responsible for the short fall.

Ownership: Personal Contract Purchase

A finance plan where the customer can defer a proportion of the purchase cost until the end of the agreement. This final payment is the guaranteed future value (GFV). This makes monthly payments affordable and allows a shorter repayment period. Mileage limit is set at the start of the agreement and the customer is responsible for all servicing and maintenance.

Benefits:

  • Enables the customer to change car more regularly
  • Enables the customer to afford a high spec car than previously able
  • Removes risk of unexpected depreciation (GFV)
  • Easy to budget due to fixed monthly payments
  • Option to replace car more often eliminating costs associated with older cars
  • Option to own vehicle outright

At the end of the agreement the customer has three choices:

  • Part exchange the car using any amount over the GFV as a deposit for the next vehicle
  • Pay the GFV and keep the car
  • Hand the car back and walk away even if the car is worth less than the GFV set at the beginning of the agreement

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FOR COMPANIES

Non-Ownership: Contract Hire in Dorset, Poole, Bournemouth and Wiltshire

The customer pays a fixed monthly rental which is based on annual mileage. The car is simply handed back at the end of the agreement, subject to mileage and condition. Rentals are subject to VAT.

Benefits:

  • Poole, Bournemouth, Dorset, Wiltshire, National contract hire and leasing discounts
  • Fixed monthly cost which can include maintenance for easy budgeting
  • Low initial outlay
  • No risk associated with ownership
  • No depreciation or disposal worries
  • VAT saving for VAT registered companies
  • 50% of the VAT element of the rentals can be reclaimed - for VAT registered companies
  • A proportion of the rental can be offset against your profitable tax - dependant on the vehicles emissions (up to 130k'km 100% offset; over 130g/km 85% offset)
  • Vehicles are not shown on the balance sheet and not counted as a company asset

What are the rules and what will be the cost to a company car driver?

  • BIK (Benefit in kind) - Additional tax on the company vehicle as it is classed as a benefit
  • BIK is worked out using the cars On The Road (OTR) value (P11D); the vehicles emissions and the drivers tax bracket

For example:

New Generation Nissan Qashqai 1.5dCi; 110PS; Acenta Premium; 6 speed manual with metallic paint. 99g/km Basic price £22,635.00 + metallic paint at £525.00 total OTR £23,160.00; For 2014/15 99g/km = 13% BIK so for a 20% tax payer sum would be:

£23,160 x 13% x 20% = £602.16 per year or £50.18 per month

The company will also have to pay additional NIC for the employee again based on the vehicles emmissions.

For outright purchases the company gets a write down allowance (WDA) of the vehicles value in the first years, based on the vehicles emissions. These purchases must form part of the first 250,000 of capital expenditure in the company's current tax year.

For example:

  • Company cars with emissions up to 95g/km can write down 100% in the first year
  • Company cars with emissions from 96g/km - 110g/km can write down 18% per annum
  • Company cars with emissions over 110g/km can write down 8% per annum