Leasing is the simplest and most common form of equipment finance designed as the most tax efficient finance method for your business. This is also used for the widest variety of assets often, for equipment with low residual value.
A lease is the most tax efficient way to fund a new purchase. Vat is paid on each rental and therefore spread throughout the period and often little or no deposit is required. Title of goods is retained by the lessor throughout the term, this allows the payments to be shown as an operating cost, giving greater tax advantages over outright purchase.
Most profitable UK business will pay corporation tax, by leasing your new equipment you will off-set 100% of the rentals against your tax bill the example below shows this:
Equipment Lease
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36 months @ £351.90 pm £81.21 per day Tax Saving example based on 3 Years |
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| Invoice value: | £10,000.00 |
| Initial payment: | £351.90 |
| Followed by 35 @: | £351.90 |
| Total repayable: | £12,668.40 |
| Less tax relief: | £2,660.36 |
| Net cost of borrowing: | £10,008.04 |
All figures exclude VAT and are strictly subject to status. Tax relief illustration assumes 20% tax rate and depreciation policy in line with lease term. Tax relief will vary depending on your individual circumstances or may not apply at all if your corporation does not pay tax. E&OE
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