Tusker: Need for contract hire will rise in answer to Vat increase
Tusker, the leasing and salary sacrifice specialist, have predicted a rise in demand for contract hire from fleet operators in answer to the hike in VAT as many will see the increased benefits including the ability to reclaim 50% of the VAT on the finance element of their monthly rentals and 100% of any maintenance element. This is opposed to outright purchase where Vat cannot be reclaimed.
At the same time, the British Vehicle and Rental Leasing Association is lobbying Government to increase recoverability of VAT to 70% as being a fairer representation of business use, so the proportion of recoverable VAT may actually increase if the campaign succeeds.
Tusker Managing Director, David Hosking, said:”We fully expect 2011 to be the year of contract hire, as more businesses wake up to the multiple benefits it offers, not just in VAT recoverability, but in cashflow management and more accurate budgeting.
“The impact of changes to the tax regimes affecting company cars is likely to reduce the attractiveness of outright purchase which has been on the wane for some time.
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