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Lease Examples,Questions And Answers


Tax Efficient
Lease Rentals are normally 100% allowable against taxable profits. This can mean a substantial saving over paying cash.

Preserves working capital
Spread the cost and don’t disrupt cash flow. You don’t pay your staff 3 years in advance.

Additional Funding
Your leasing exposure has no impact on existing bank or credit lines.

Increase Profitability
Lease the equipment now and start to generate immediate income

Payment Profiles
Tailored to your needs

Fixed Rentals
Rentals are fixed and not subject to inflation or interest rate hikes.

Example the benefits of leasing:

Cash Versus Rental - Tax Benefit
 
ABC
 
Cost of Equipment £3,000.00
Customer pays Corporation Tax at: 30%
 
Capital Allowances = 40% in the first year, 25% per annum on the balance thereafter.


Cash Purchase
 
The Customer can claim Capital Allowances as follows:
 
Term 3 Years    
 
Year 1 £3,000.00 x 40% Tax Relief = £1,200.00
Year 2 £1,800.00 x 25% Tax Relief = £1,350.00
Year 3 £1,350.00 x 25% Tax Relief = £337.50
 
  Amount on which Tax Relief is available = £1,987.50
 
  Amount of Tax saved by buying cash is 30% of £1,987.50 £596.25
 
Lease Rental Agreement
 
Finance Lease on £3000 over 3 Years - Profile 3 + 33
 
Term 3 Years    
 
Year 1 14 Months x £100.92 = £1,412.88
Year 2 12 Months x £100.92 = £1,211.04
Year 3 10 Months x £100.92 = £1,009.20
 
  Amount on which Tax Relief is available = £3,633.12
 
  Amount of Tax saved by buying cash is 30% of £3,633.12 £1,089.94
 
  Leasing is more tax effective by £493.69 over 3 Years


Frequently asked questions

Q. What type of company would choose to lease as a method of acquiring capital equipment?
A. All kinds. From FTSE 100 to the local gym, from public sector schools to newsagents, everyone can and does because it makes good business sense

Q. Isn’t leasing expensive compared to other funding options?
A. This is a myth. Leasing rates can be very competitive and combined with the tax benefits the cost may be less than other traditional bank facilities.

Q. Isn’t leasing just for companies who can’t afford the cash?
A. Just the opposite actually. Companies who lease do so because they know there is a better use for their spare cash. Uses that allow them to earn more money. Or simply, they want to reserve their money for uncertain business times.

Q. How long does it take to get a facility in place and is there any security required?
A. Decision times can be less than an hour but it depends on each particular client. However, 90% of our proposals have a decision within 48 hours. No extra security is required unlike many banks.