The firm has highlighted how contract hire and leasing companies will be adversely affected by the increase in VAT because vehicles that are currently on contract will have been ordered at a time when VAT was at 17.5% or even 15%. Now, with VAT rising to 20%, leasing companies will have a shortfall of between 2.5% to 5% of the disposal value when they sell vehicles at the end of their contracts.
 
Managing director Hugh Wallace said: 'EconoWise is all about working with our customers and helping them save money during these difficult times. So we think it’s fair that our customers are not disadvantaged by the rise in VAT announced in the Budget.
 
'As a result, I’ve implemented a freeze in rentals on all orders we’ve received prior to the Budget and any new orders we receive up until the end of September 2010.
 
'Customers will of course have to pay the appropriate amount of VAT on their rentals during their contract, but we will absorb the higher rate of VAT we have to pay on vehicle disposals.
 
'On a typical fleet car, I estimate this freeze is worth around £10 a month – a welcome help to our customers.'