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Finance Lease

Finance lease, Financing exhisting machinery, Manchester, Birmingham, London

A Finance Lease offers similar benefits and risks to a HP agreement. However 'title' (ownership) to the equipment remains with the finance company at all times. As the customer does not have outright ownership, no capital allowances are available. However, equipment is capitalised in the Balance Sheet, and depreciation is charged to P & L account. VAT is paid on each rental throughout the term. At the end of the Finance Lease, the customer enters into the “secondary period “whereby one month rental is is paid on an annual basis, (Peppercorn rent). Alternatively the customer sells the equipment and retains 90% of sale proceeds and accounts for balance to the finance company.

Similar to our Hire Purchase solution, with a repayment plan over 1 to 5 years, (except in certain circumstances) you can take advantage of substantial tax benefits associated with leasing. This is normally applicable when you acquire short life equipment and you decide to depreciate the equipment over a short period of time. All the Finance Lease rentals paid can be off-set against tax.

Finance leasing is a flexible, tax-efficient way for your business to acquire the assets it needs without using up cash reserves, In brief:

  • Financing for up to 100% of the purchase price (exc VAT)
  • VAT payable on the rentals, not the purchase of the asset
  • A Finance Lease offers the option to carry on renting the asset for a nominal sum OR to sell it and retain most of the cash proceeds when the term ends

There is normally no need for additional security as the finance is usually secured on the asset, and you may realise some value at the end of the term.

How a Finance Lease works

With a Finance Lease you also get a choice of fixed or linked rate funding as well as a payment structure that can be matched to your cash flow patterns to ease budgeting. We retain ownership of the assets purchased, but you can sell them on our behalf at the end of the term and keep most of the proceeds.

Who a Finance Lease is for?

If you want to buy commercial vehicles and recover some of their value at the end of a fixed period, this could be the right business finance solution for you.

A Finance Lease can be suitable for businesses of all sizes, and all types of assets.


See also



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