Tag: Lease Finance

Lease Finance – A flexible way to finance

A lease helps you keep your options open when you acquire an asset, by not committing yourself to ownership. So if it’s flexible financing you’re after, our lease finance facility could be the way forward.

How does lease finance work?

We buy and own the asset and you enter into an agreement to hire it from us at an agreed rental over a set period. This may be a more tax efficient way for you to have use of the asset.

You also have the option to retain use and possession of the asset when the lease contract ends – potentially at a price agreed at the start of the lease period. Alternatively, you can sell the equipment for and on behalf of the leasing company and retain the vast majority of the sale proceeds as a rebat of rentals.

At the end of a leasing agreement, the asset is sold and you receive the major share of the proceeds. As the asset owner we claim and reflect any available writing-down allowances on the asset purchase in lower monthly lease payments.

Finance Lease is different to Hire Purchase. Initially when the asset is purchased, you will only pay the VAT element on the deposit / initial rental that you put down. The finance house will pay the remainder of the VAT on the purchase price. Your monthly repayments are for a fixed period and generally a fixed rate. However, your monthly repayments will attract VAT, which you reclaim in your Quarterly / Monthly VAT return.

However, at the end of the ‘primary period’, you have various options:

• Sell the goods to an independent third party and will be offered the majority of the sale proceeds. (Sale price must be agreed with the finance house)
• Enter into a Secondary Rental Period and generally pay 1* monthly rental on an annual basis and never own the goods. (*Secondary Rental Period varies with different finance houses. The star denotes that it is not always 1 rental.)
• Return the asset to the finance company.

Key highlights:

• Low up-front costs – you pay a small deposit and can use the asset immediately
• Flexible repayment structure – rental payments can be tailored to match your cash flow
• Fixed or variable interest options – you decide which suits you best
• Tax advantages – as well as reclaiming VAT, you may be able to claim capital allowances and also offset repayment interest against profits (special rules apply to cars)

Assets you can typically acquire with lease finance

• Fork lift trucks / aerial work platforms
• Construction equipment
• Cars and vans
• HGVs
• Buses and coaches
• Plant and machinery
• Agricultural equipment
• Information Technology & Office Equipment
• IT equipment

Unsure whether leasing is beneficial for your business? Call us today to discuss your requirements and we can inform you of all our asset finance options and can come up with a solution to best suit your business needs.