Finance Lease

Used to finance various projects including: IT, Software, Vehicle, Machinery, Refurbishment, Soft Costs and Fit-Outs

Under a finance lease, the finance company purchases and owns the asset throughout the term of the lease and hires the goods or equipment to the customer over an agreed period (primary period).

At the end of the lease the customer can either return the goods to the finance company and then upgrade to new equipment on a new lease, or there is usually an option to continue leasing the goods after the primary period at an agreed annual payment.

All rental payments are subject to VAT but not VAT upfront.

  • Funding for up to 100% of purchase cost.
  • Fixed rentals.
  • VAT spread across periodic rentals, not paid upfront.
  • Tax effective – rentals can be offset against tax.
  • Customer does not own asset at end of agreement.
  • Equipment is either kept and a nominal rental paid or the customer sells it as the finance company’s agent and receives the majority of the sale’s proceeds.

Operating Lease

Generally used to finance vehicles, machinery and equipment including: HGVs, Plant equipment, Aircraft, Vessels

Unlike a finance lease, at the end of the operating lease the title to the asset does not pass to the customer, but remains with the finance company. All the risks for the residual value and disposal lay with the finance company. Accordingly, at the end of an operating lease, the customer has several possibilities:

  • Continuation of the lease
  • Return of the equipment
  • Renewal of equipment
  • Restoration of equipment

The main advantages of operating lease are:

  • Treated as operating expenses deductible from profits
  • Improvement of cash-flow
  • Tax efficient
  • Favourable Balance Sheet treatment

Sales & Leaseback

With a sale & leaseback, you can immediately free the capital tied up in your assets. The assets such as vehicle, machinery or IT are placed on a finance lease and the agreed cash value is paid straight into your company.

  • Funding for up to 100% of purchase cost.
  • Fixed rentals.
  • VAT on rentals.
  • Tax effective – rentals can be offset against tax.
  • Increasing your company reserves – the cash released through Sale & Leaseback goes straight back into your business.