BUSINESS Finance

How it works

Leasing is a very cost-effective way to invest in business equipment. In addition to its many benefits this option competes very well in simple monetary terms.

Why Lease?

When leasing you will get your equipment straight away, rather than when budgets allow.

A lease option is simple and safe – with the fixed cost throughout the lease period there will be no changes or unpredictability to watch out for.

Your business can stay up-to-date with the latest equipment! Leasing provides you with the option of upgrading the equipment at any stage throughout the agreement by simply restructuring the payment schedule.

Offset 100% of the rentals against your tax liability to maximise tax efficiency.

*Take a look at our lease vs buy example below.

Lease vs Buy

Equipment Cost: £7,500

Lease Period: 3 Years

Frequency: Quarterly

Company Tax Rate: 19%

Cash Purchase

Total Tax Relief
639.30

Lease Rental

Total Tax Relief
1,752.75

Year Capital Allowances Tax Relief
1 18% of £7,500 = £1,350 Less 19% = £256.50
2 18% of £6,150 = £1,107 Less 19% = £210.33
3 18% of £5,043 = £907.74 Less 19% = £172.47
Total Tax Relief: £639.30
Year Capital Allowances Tax Relief
1 4 rentals of £768.75 Less 19% – £584.25
2 4 rentals of £768.75 Less 19% – £584.25
3 4 rentals of £768.75 Less 19% – £584.25
Total Tax Relief: £1,752.75

By choosing to lease, the company has saved £1,113.45 in tax relief

*Illustrative and appropriate to current levels of taxation.

Leasing is a smart investment solution which creates flexibility and benefits companies in so many ways.

Here are some key reasons why so many organisations like yours use leasing as an alternative to cash or a bank facility.

  • Keep cash flow within the business rather than handing over a lump sum for a depreciating asset.
  • Get the equipment based upon your needs, not just when budgets allow.
  • Enjoy fantastic tax advantages, payments are tax deductible unlike using cash.
  • Keep up with the latest technology with the ability to upgrade at any time throughout the lease period.
  • Structure lease payments to suit customers’ needs and allowances.
  • Protect existing credit lines by using leasing as an alternative funding facility.
  • Spread the cost of your purchases in line with the return on the investment.
  • Spread the cost of the VAT which is paid in instalments rather than as a lump sum up—front ( excluding Hire/ Lease Purchase agreements).

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