Contract Hire And Vehicle Excise Duty

By Author: Lee Tucker
Total Articles: 5
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The cost of contract hire and leasing is linked to a number of factors: the value of the vehicle, the residual value, the contract length and the annual mileage to name a few. Another cost factor is the price of the road fund licence as this cost will be passed from the funder to the customer.

The Government has been consistently raising the cost of vehicles with high CO2 emissions. The top vehicle excise band (VED) has an annual rate of £425 for road fund licence renewals. If you also include the cost of first year rates, also known as showroom tax at £950 you are adding a considerable amount to the contract. Over a three year contract you will be adding £1800 to the cost of the contract, on a typical 3+35 agreement this will be in the region of £50 a month. First year rates were introduced from April 2010 in a government drive for CO2 emission awareness.

If you are willing to consider a low emission vehicle in VED bands A to D there is no cost for first year tax so this will immediately save you some money on the contract. The cost of annual road fund licence is also much less so saving you even more. ...
... The cost saving will also be recognised in your monthly fuel bill as well.

The smaller, diesel engine vehicles will typically be in the lower bands as well the new age hybrid vehicles. It is simply to find the information though - all manufacturers will publish their range and indicate the applicable VED band. All manufacturers are working hard to reduce their carbon footprint and the trend in reducing CO2 will continue. Manufactures are required to balance the CO2 emissions across their ranges.

The cost of first year rates and annual rates can be found through approved government websites as well.

It is always recommended to research thoroughly before entering into a contract hire or car leasing agreement. Check if the road fund licence is included in the cost of the contract as it isn't in all cases. If you are using a reputable contract hire and leasing broker they should make all costs clear from the outset in a formal, written quote, however choosing best car leasing offers is also tuff in the competitive market. Best Luck!

Lee Tucker is a Sales Director of The Leden Group. Whether you are looking for car leasing, van leasing offers, contract hire, Audi leasing or private car leasing, Leden Group will have a solution to meet your needs.