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Farm Machinery
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Tractor contract hire/leasing
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<blockquote data-quote="warksfarmer" data-source="post: 663814" data-attributes="member: 192"><p>Not normally for a vehicle. If you look at a contract hire price vs purchase price on a car generally the hire works out cheaper over the period of time in terms of money you actually pay annually.</p><p></p><p>The contesting point is the period of time because generally leasing a vehicle you do over 3 years and hand it back as the warranty runs out where as purchasing a vehicle people tend to do it over 5 years.</p><p></p><p>So pricing them up against each other accurately is difficult and really the only way you can do it is by putting a 3 year purchase against a 3 year contract hire. But because a vehicle looses more early on then the depreciation on the purchase at the end of year 3 generally makes the contract hire the cheaper option.</p><p></p><p>Also remember with purchase its normally 1 year on the capital allowances where as contract hire can benefit you every year of the lease. If its a commercial vehicle then 100% of the cost is allowable against tax. Even if its part business and part private use you are still likely to be able to offset 50% of the lease cost against the annual profits thus reducing the tax payable.</p><p></p><p>Bit of a minefield and you need to speak to your accountant really rather than listen to a internet forum.</p></blockquote><p></p>
[QUOTE="warksfarmer, post: 663814, member: 192"] Not normally for a vehicle. If you look at a contract hire price vs purchase price on a car generally the hire works out cheaper over the period of time in terms of money you actually pay annually. The contesting point is the period of time because generally leasing a vehicle you do over 3 years and hand it back as the warranty runs out where as purchasing a vehicle people tend to do it over 5 years. So pricing them up against each other accurately is difficult and really the only way you can do it is by putting a 3 year purchase against a 3 year contract hire. But because a vehicle looses more early on then the depreciation on the purchase at the end of year 3 generally makes the contract hire the cheaper option. Also remember with purchase its normally 1 year on the capital allowances where as contract hire can benefit you every year of the lease. If its a commercial vehicle then 100% of the cost is allowable against tax. Even if its part business and part private use you are still likely to be able to offset 50% of the lease cost against the annual profits thus reducing the tax payable. Bit of a minefield and you need to speak to your accountant really rather than listen to a internet forum. [/QUOTE]
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