MTCR Marketing Ltd trading as Hills Contracts
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Frequently asked questions

What is Contract Hire?

Contract Hire is a finance method designed for maximum benefit for VAT-registered customers. It is designed to make motoring worry free, tax efficient and risk free.

What contract duration and mileage allowances do you offer? 

We offer Contract Hire durations from 24 to 60 months on all vehicles. Total mileage allowance is 120,000 miles.

Who owns the vehicle?

The finance supplier owns the vehicle during the contract period. The customer can own the vehicle as a third party after the contract terminates.

Who insures the vehicle?

As the customer is the keeper of the vehicle, insurance is the customer's responsibility. Omega Vehicle Solutions can quote low-cost motor insurance for business users. Omega Ins Quote

Who carries the residual value risk?

The finance company, the finance company calculates a residual value at the time of quoting. If at the end of the contract the vehicle is worth less than originally expected, the financier is responsible for the loss. The second-hand car market is very unpredictable. Why should companies risk their profits by gambling with an unknown vehicle sale price when they come to sell in two, three or four years' time? The finance companies have dedicated used vehicle disposal functions that are experts at predicting and achieving the very best prices for their vehicles at the end of the contract.

Who carries the on going maintenance costs?

If a non-maintenance contract is chosen, the customer is responsible for all routine servicing and maintenance costs. Assuming a maintenance option is taken, the customer need never worry about any unexpected servicing or maintenance costs upsetting cashflow (and profits!). A blown bulb, a blown tyre or a blown clutch is only a freephone call away from a speedy, no-cost repair. Peace of mind that allows the customer to get on with running their business, rather than worrying about the running of vehicles.

What is Non-Maintenance Contract Hire?

A Non-Maintenance Contract Hire agreement is where the customer is responsible for maintaining and servicing the vehicle as recommended by the vehicle manufacturer. The finance company does however supply the road fund licence for the full contract period.

What is Full-Maintenance Contract Hire?

A Full-Maintenance Contract Hire Agreement is where the maintenance contract supplier is responsible for maintaining and servicing the vehicle. This includes all costs due to fair wear and tear. Additional facilities may be added to a Full-Maintenance contract such as RAC cover and relief vehicle cover.

Is the vehicle cost on or off the company balance sheet?

Off balance sheet. Contract Hire is the acquisition method that guarantees the vehicles will be off the balance sheet. This has the following advantages:

  • Gives an effective cash injection or opens another credit line. Perhaps allows the customer to repay a loan or reduce an expensive overdraft. 
  • Reduces the company's assets or investment level, therefore increasing the return on investment ratio (the profit is now a larger percentage of the asset value). This will make the company look a better performer in the eyes of current and potential investors, including, of course, the banks. 

Typically how much cash is required up front? 

Typically a deposit of three monthly instalments is required. Up to nine months may be required for a business with less than two full years trading.

Who arranges vehicle collection and delivery?

We arrange both delivery and collection anywhere in the mainland UK.

Does the customer own the vehicle at the end of the contract?

No! The customer doesn't own the vehicle at the end of the Contract-Hire. Is this a disadvantage? We don't think so! If you do own the vehicle at the end of the lease, it means that you do not have to go through the inconvenience of disposing of it. If a third party wishes to purchase your old vehicle this can also be arranged.

Can the monthly payments be offset in full against Corporation Tax?

Yes. Cars emitting 160g/km CO2 or less are 100% fully allowable against and for cars emitting 161g/km or more 85% of the finance element of the lease cost is allowable against business expenses. This is regardless of the actual costs of the vehicle. 

Vans are fully tax efficient. For cars and vans which are on a full maintenance lease, the maintenance element of the lease cost can be offset against tax.

Assuming some home to office use of the vehicle, are there any VAT benefits of Contract Hire?

Yes. Following the VAT changes of 1 August 1995 Contract Hire has become even more desirable and more popular. There were three major changes.

  1.  Businesses can recover the VAT payable on the purchase of cars only if they are wholly for business use. Remember that even a single mile of home-to-office travel means that the vehicle does not qualify as "wholly for business use". 
  2. The financiers are able to recover all VAT payable on vehicles purchased, as they are purchased wholly for business use, regardless of the customer's use of the vehicle! This is where the major cost savings lie. 
  3. There is a 50% restriction for business on the recoverable VAT on leasing payments (not the maintenance element, which is still 100% recoverable, unless the car is wholly for business use). Whilst reducing the benefit slightly for the customer, the overall savings made are significant for Contract Hire. 

What happens if I want to finish my contract early?

If you wish to end the contract early a termination charge is payable. This is usually 50% of the outstanding monthly rentals payable.

What are my options at the end of the lease?

There are three options available at the end of the contract period.

  1. To hand the vehicle back and replace with a new one (subject to status). 
  2. To extend the contract at a discounted rate, usually 5% for a six-month extension, 10% for a 12-month extension. 
  3. Ask for a purchase price and purchase as an individual. (The company cannot purchase the vehicle; this is due to the tax advantages that have already been achieved.) 

Is there anything to pay at the end of the Contract Hire Period?

Hopefully not! Charges are made only if the vehicle has done more miles than contracted to do. This is called an excess mileage charge; the excess mileage charge will be written on the contract and will vary from vehicle to vehicle. To avoid this charge we encourage customers to advise us during the contract if they feel that more or fewer miles than originally expected are likely to be done and we will amend the contract accordingly. The only other charge would be if the vehicle had been damaged and not repaired.

CO2 Based Company Car Tax

CO2 emissions and company car tax rules Since April 2002 company car tax has been based on a car's list price and official C02 emission figure. The percentage used to calculate the benefit is based on carbon dioxide (CO2) emissions measured in grams per kilometre (g/km). 

Initially a minimum charge of 15% of the car's price was applied to cars emitting CO2 at or below a specific level, measured in (g/km). This charge rises in 1% increments for every 5g/km over the minimum level (there is an upper ceiling of 35%). 

Diesel cars: there is a supplement of 3% up to the maximum charge of 35%. This supplement was waived for diesel cars first registered before the end of 2005 that met the EC emissions standard known as Euro IV. The Euro Standard is shown on the registration document for cars first registered after 1 March 2001 and is also included in information available in The Car Buyer's Guide.

The table below shows the relationship between CO2 emissions and percentage.

Percentage charge relative to CO2 emissions (before discounts)

Company Car Tax BIK Rates 2019-23

bik19 23


The table above shows BIK tax bands (also known as company car tax) based on CO2 emissions of your vehicle.

  1.  Add 3% for diesels up to a maximum of 35% in 2013/14 and 2014/15. 
  2. Add 3% for diesels up to a maximum of 37% in 2015/16 
  3. From 2016/17 onwards the diesel supplement is scrapped. 

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Telephone : 01562 549 725

Company Address :
MTCR Marketing Ltd trading as Hills Contracts
Worcester Road
DY10 1JB

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MTCR Marketing Ltd trading as Hills Contracts are a credit broker and not a lender, we are authorised and regulated by the Financial Conduct Authority. Registered No : 676146

Registered in England & Wales with company number : 1734580 | Data Protection No : Z2372694 | VAT No : 899898891

Registered Office : MTCR Marketing Limited T/A Hills Contracts, Worcester Road, Kidderminster, DY10 1JB

Disclaimer: All vehicle images and descriptions are for illustration and reference purposes only, all vehicle leases are subject to credit approval and subject to change at any time. E&OE.

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