Finance Lease

A finance lease provides all the main benefits of ownership without the potential burdens, and as such has proved to be a popular way of funding a wide variety of business assets.

The main benefits include:

• The flexible repayment structure provides your business with the ability to match rentals to your cash flow
• The fixed rental helps with the budgeting process
• VAT is paid on the rentals and not on the purchase price. This can usually be reclaimed if your business is VAT registered, but special rules apply to company cars.
• Rentals can usually be offset against taxable profit, but again, special rules apply to company cars.

Lease Purchase and Hire Purchase

These are well established and straightforward repayment facilities where title to the asset passes to your business upon payment of all rentals due under the agreement, including the 'option to purchase' fee. The main differences between Lease Purchase and Hire Purchase are in the terms and structure of repayments.

Key benefits include:

• Ownership normally allows your business to claim the appropriate capital allowances and to offset the interest element against taxable profits
• VAT on the cost of the asset is normally payable upfront, in addition to the deposit, but is usually reclaimable. (Special rules apply to company cars).
• Fixed rentals help the budgeting process.