Finance Lease

• Low initial payments
• Releases capital
• Rentals allowable against tax
• All the advantages of ownership
• On balance sheet asset
• VAT recoverable
• Improved cash flow

Low initial rentals
On a typical Finance Lease Agreement, the initial payment is normally equal to just a few months’ rentals.
With a Finance Lease Plan, the cost of the car plus lease charges is spread evenly over the chosen lease period. The lease period might be two, three or even four years.

If you wish to retain the car beyond the lease period, when you have paid the final lease rental, we will be happy to continue the lease for a very small annual extension rental. This is normally called a peppercorn rent.

Releases capital
A Lease helps to release capital which would otherwise be tied up in vehicles, to use in profitable areas of your business.

Rentals allowable against tax
The lease rentals you pay are allowable against your profits before tax, for details of the new rules regarding this please speak to one of our advisors.

All advantages of ownership
Finance leasing gives you all the advantages of ownership, unrestricted use of the vehicle, plus proceeds of sale by way of refund of rentals.

On balance sheet asset
Vehicles acquired through a finance lease will be credited as an asset on your balance sheet from January 1987 (refer to the Statement of Standard Accounting Practice No 21 dated August 1984, for further details).

VAT recoverable
Rentals payments are subject to VAT. Whilst this is no longer fully recoverable on cars if there is any private use, the fact that rental companies can now reclaim input VAT on new (and other qualifying cars) means that the rentals are comparatively lower. The net cost to you, the operator, is still reduced.

If your business largely involves making VAT-exempt supplies, or if you are self-employed or in a partnership, you should check this aspect with your accountant. We offer alternative schemes if you are not in a position to recover VAT.

Improved cash flow
The availability of three and four year lease periods and the low initial payment required enables an improved cash flow to be obtained.

Additional information
In addition to freedom of choice on timing, you normally also have the right to negotiate the sale of the car on behalf of the funder. You can thus ensure that you have obtained the maximum price.

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