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Benefits:
|
|
Known payment and
commitment terms |
|
|
No extra costs if
interest rates increase |
|
|
Interest deductible
against profit |
|
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You claim the Capital
Allowances |
|
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You show the asset
on your balance sheet |
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And after the final
"option to purchase" payment it's yours |
Finance Lease
Here you get full use of the equipment
but legal ownership is retained by the finance company for the duration
of the lease.
In effect the finance company purchases
the lorry or trailer and then leases it to you for a fixed monthly
payment over a fixed period. Like rental costs you will have to
pay VAT on these payments but unlike renting you do have an equity
interest in the asset.
Benefits:
|
|
Improved cashflow
because you do not have to pay the VAT on the purchase. |
|
|
Known
payment and commitment terms. |
|
|
Option
of extending the agreement into a secondary period. |
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Payments
generally fully chargeable against profits. |
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You can
if you wish still show the asset on your balance sheet. |
End of Lease
Provided you've met all the terms of
your agreement and you decide not to extend, the equipment can be
sold to an agreed independent third party where you will receive
a substantial share of the net sale proceeds as a rebate of rentals.
This equity release can then, if required, be used towards the deposit
on your next purchase.
These are general notes and should
be read in conjunction with the terms of the agreement together
with you obtaining independent professional advice regarding your
own taxation position.
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