Finance Lease
Finance Lease
Finance Lease is a form of ‘on balance sheet’ funding that can be used to finance your company vehicles, plant and office equipment. Once the Primary Period of the agreement expires, the items need to be disposed of, and a rebate of rental is paid to the hirer. Alternatively the agreement can be extended for a Secondary Period.
Corporation Tax
Monthly rentals are treated as a revenue expense and so are fully allowable on vehicles with an original cost up to £12,000 including VAT. If the vehicle cost is more than £12,000, only a proportion of the rental is allowable. Commercial vehicle rentals are 100% allowable regardless of capital cost. *Example: On a vehicle with a capital cost of £14,000, the monthly rental would be subject to 93% as a revenue expense.
VAT
The lessor reclaims the input VAT on the original capital cost of the item, with rentals calculated on the VAT exclusive price. All monthly payments are subject to VAT at the current rate. For vehicles, which qualify under Article 7(2) (a) of the VAT (Input Tax) order, 1992 (as amended), if the vehicle is available for private use, only 50% of the VAT charged on the finance element of the payment can be reclaimed.
100% of the VAT charged on the maintenance element can always be reclaimed.
The Contract
The contract can be tailored to meet your company’s exact requirements, with the option of adding a final deferred payment to the full range of available payment profiles.
The Benefits
*Flxed monthly costs
*Maximised tax relief
*Minimum capital Outlay
*No mileage restriction
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