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An Operating Lease is a lease with fixed instalments reflecting a predicted future residual value, an amount which remains unpaid by you - therefore instalments are reduced.

The residual risk is taken by JCB Finance who at the end of the term attempt to sell the asset in order to realise this unpaid amount. You are protected by any potential loss in value of the asset (subject to return conditions) and this transfer of risk may allow the you to treat the asset as off balance sheet, which may facilitate significant improvements on some of the key accounting ratios like return on capital employed. Speak to your accountant or tax advisor to see how this may apply to your individual circumstances.


Operating 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 instalments may be offset against taxable profits which may be a tax efficient form of leasing for your business.  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 or tax advisor. You will not own the asset at the end.


Service, repair and maintenance contracts may run alongside your operating lease, helping to spreading the cost and accurate budgeting – speak to your local JCB Dealer for details.




  • Low capital outlay - usually one monthly instalment per year of the lease
  • Spreads the impact of VAT which is collected on each rental as it falls due
  • Low fixed instalments
  • Accurate budgeting
  • Preserves working capital reserves
  • Removes residual value risks
  • Possible off-balance sheet funding and tax efficient  - speak to your accountant about how the facility would work for you


How it compares:



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