Asset Finance Berkshire - Leasing Explained

Leasing Benefits

•100% of the monthly payments can be off-set against Income/Corporation tax

This is in replacement of write down allowances, 100% against taxable profits (like write down allowances i.e. 50% in year one and 25% each year thereafter over term of agreement)
First year allowances of 100% only relate to energy saving equipment and water products

•VAT re-claimed in full if vat registered (leasing figures are calculated net of vat, therefore even if not vat registered there is a saving on vat by spreading it over the period)
•95% of any sale proceeds of the equipment
•Clients can settle the agreement at any time by introducing a third party to purchase the equipment from the finance company
•By utilising a leasing facility it keep existing credit facilities in place for emergencies, business development, etc
•What is attractive is the relatively low initial outlay and monthly payments thus maximising profits, return on investment with no capital outlay

We have developed the taxation side so that it is clear exactly what clients are allowed to claim. They can claim 100% over the term of the agreement split into allowable areas 50% in year one and 25% over the term of the agreement.

Should they wish to settle the agreement, they will need to introduce a third party to purchase the equipment from the finance company. Market Value is the term used by the Inland Revenue, but in the case of systems this would be very low. Your company or Pinewood could act as the third party and purchase from the finance company. Then sell back to the customer to capitalise - this is a paper transaction.

A lease has three parts (1) Initial Payment (2) Primary Rentals (3) Secondary Rentals. After the (2) Primary Rental Period, the customer can pay an annual payment of one monthly rental and keep the goods for another year or return the goods to the finance company who will sell the goods and return 95% of any sale proceeds to the client.