Advantages of Leasing
Leasing equipment can help end users to manage their cash flow and budgeting. It allows them to acquire the equipment they need and pay for it while earning money from it at the same time.
There are also tax benefits to the end user of the equipment over its working life. All payments made under a lease agreement reduce the taxable profit of the business by 100% of the charges – effectively reducing the net cost of the leasing package to the end user.
Leasing also allows equipment to be upgraded, exchanged or increased as developments in technology and working practices demand, helping them to keep up with new advances without being tied into expensive equipment.
Leasing can help end users to protect and reserve other lines of credit (such as loans and overdrafts) and offers a viable, cost effective alternative to these funding methods.
Tax breaks mean leasing is not expensive!
Many people believe leasing is an expensive option. This simply is not the case. This is why even large ‘cash rich’ companies are choosing to lease.
Unlike many high street bank facilities or overdrafts that are subject to the change in market conditions, a lease facility with its protected payment and fixed interest rates allows for effective future budgeting.
100% allowable against pre-tax profits!
Because finance lease rentals are 100% allowable against pre-tax profits, the total cost of your purchase, capital and interest can be offset during the lease period, with your payments deducted as a trading expense. Contrary to popular belief leasing is not expensive, in fact the real cost of your lease can be significantly lower than the payments you make!
A cash purchase will allow tax relief only on the capital allowances on the equipment. This is currently 18% of the cost in the first year and 18% in subsequent years based on a reducing balance each year.