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FINANCE LEASE

Finance Leases typically enjoy a low initial capital outlay and the VAT, paid on each instalment, is therefore spread over the period of the lease. If a qualifying asset is used for business purposes and you are VAT registered (special rules apply) you may be able to recover some or all of the VAT applied to the lease rentals.

The availability and value of tax relief will depend on your individual circumstances – you can request a copy of the contract terms without any obligation so that you can discuss this with your accountant tax advisor for details and how the facility you are considering would be treated for your business.

 

The asset can continue to be used after the primary period, in exchange for a nominal annual continuing period instalment. Although ownership never passes to you, when the machine is no longer required, a high percentage of the ultimate net sale proceeds is refunded as a rebate of instalments

 

Benefits:

 

  • Low capital outlay - usually one monthly instalment per year of the lease
  • Spreads the impact of VAT which is collected on each instalment as it falls due
  • Tax efficient
  • Accurate budgeting
  • On sale of the asset a high percentage of the sale proceeds is refunded

 

How it compares:

 

 

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