Lease Hire has many of the benefits of Contract Hire without the perceived inflexibility.
In addition, you may wish to offset a proportion of the vehicle cost as a final payment. This is usually referred to as a balloon payment calculated at the outset of your agreement as a percentage of the vehicle price. This could reduce your monthly rentals and have a positive effect on your cashflow. Your balance sheet is likely to show the value of any vehicle on a DAF Lease Hire agreement as a fixed asset and any outstanding rentals as a liability. With low deposits, flexible repayment periods and fixed rental amounts you could control and improve your cashflow.
Tax relief and VAT
You may be able to claim tax relief on Lease Hire rentals.
After deducting a realistic residual value, the depreciation is charged as a revenue expense against the profit and loss account. Interest is an allowable expense that can also be charged as a revenue expense and spread over the term of the agreement. As the Manufacturer Finance House can recover the VAT on the purchase of all leased vehicles, your rental is calculated using the on-the-road (OTR) price exclusive of VAT. You could claim up to 50% of the VAT payable on the rental on cars where there is both private and business use and up to100% on commercial vehicles and cars where there is no private use. Please note, all references to taxation and VAT are subject to confirmation by your professional advisor.