File picture: Gonzalo Fuentes / Reuters.

London - Lewis Hamilton has reportedly agreed to a £40 million-a-year (R720 million) contract extension with Mercedes that would make him the highest earner in Formula One.

Sportsmail understands the quadruple world champion has finally ironed out the wrinkles in the long-delayed deal, which may be announced ahead of the British Grand Prix on July 8.

Hamilton’s contract will cover the 2019 and 2020 seasons. Agreeing to a third year, as would usually be the case with driver deals, was impossible because the sport’s regulations are being redrawn for 2021 and nobody can foretell which teams will even be on the grid.

Hamilton’s improved £40m salary, depending on bonuses, also nudges him ahead of Ferrari’s Sebastian Vettel - who currently earns £38m (R684m) - as the biggest earner in Formula One.

Hamilton’s team principal Toto Wolff, asked when his star driver’s extension would be revealed, hinted that talks had concluded, saying: "Maybe it is about choosing the right moment." Mercedes F1 chairman Niki Lauda confirmed: "Lewis will drive for us."

Mercedes said it has not decided when to announce the deal, with its home race in Germany, a fortnight after the British round, offering another fitting backdrop. One Mercedes staff member called it the SOH question - Silverstone or Hockenheim?

Hamilton’s new deal extends his financial earnings with Mercedes by about £8m (R144m) a year from £32m (R576m).

He will continue to strike his own side-by-side agreements with Mercedes sponsors, such as Tommy Hilfiger, Monster Energy and Puma.

Will it be his last?

This could be Hamilton’s final contract - he will be close to 36 when it ends - though he has spoken privately of dreaming to round off his career at Ferrari, and that may yet appeal. As may staying at Mercedes, his backers in one form or another for 20 years.

Hamilton’s powers are hardly waning, as he proved with a faultless drive to win the French Grand Prix on Sunday to regain the championship lead over Vettel by 14 points. There, he hugged Daimler chairman Dr Dieter Zetsche and rubbed the Silver Arrow on his winning car, both of which were signs business had been settled satisfactorily.

Valtteri Bottas is likely to remain in the second Mercedes next season. Although Daniel Ricciardo is available when his contract at Red Bull expires in December, Mercedes likes the low-maintenance aspect of Bottas’s personality. So does Hamilton, who relishes the tranquility after his rivalry with Nico Rosberg.

Hamilton now faces a busy three weeks on the track. After victory at the Paul Ricard Circuit in France come the Austrian and British races on consecutive weekends.

Mercedes has won in Spielberg, in rural Austria, in each of the past four years.

"It is a fairly decent track for us," said Hamilton. "I don’t see why it will be different now. The car should be good there."