A finance lease is a flexible, tax efficient way for your customer to acquire the assets they need without using up valuable cash reserves.
Key features and benefits of a finance lease:
- Finance is available for up to 100% of the purchase price(excl. VAT)
- Flexible and tax-efficient funding.
- Rentals can be matched to your cash flow to ease budgeting
- VAT is payable on the rentals, not the purchase of the assets
- At the end of the lease agreement you can either retain the asset for a nominal annual sum or sell it and retain most of the sale proceeds
- There is usually no need for additional security as finance is normally secured on the asset
With a hire purchase agreement, once all the payments have been made, the business customer becomes the owner of the equipment. Capital allowances can be a significant tax incentive for businesses to invest in new plant and machinery or to upgrade information systems. Under a hire purchase agreement, the business customer is responsible for maintenance and insuring of the equipment.
Key features and benefits of a hire purchase:
- Up to 100% finance of the purchase price can be agreed with the option to defer the VAT payment
- Option to buy the asset for a nominal fee at the end of the term
- Payment structure agreed at the outset for easy budgeting
- Repayments can be matched to your cash flow and the depreciation of the asset
- Unlike some bank loans, additional security is not usually required
- You can claim immediate capital allowances on the equipment
- The interest element of the payments is tax deductible
- VAT is immediately recoverable on the whole purchase price (except in the case of cars)