Finance Options
If you are looking for an alternative to paying 100% of the costs of the machinery up-front, we would be happy to help you obtain lease finance for your purchase.
For those who are not familiar with leasing, here is a quick summary of the potential benefits:
- No major up-front costs - repay the capital as the capital earns you money.
- Lease payments are treated as operating costs and are therefore 100% allowable against pre-tax profits, so the real cost of your lease is dramatically lower than you might think.
- You only pay VAT on the rentals as they fall due whereas on a cash purchase, the full amount of the VAT is payable on day one.
- Cash purchases only attract a writing down allowance against corporation tax or income tax of 40% in year one and 25% thereafter on a reducing balance basis.
Example based on quarterly payments over 3 years |
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| Cash or Hire Purchase | Lease Rental | |||
| Cash Price | £1,000.00 |
Quarterly rental | £100.77 |
|
| Day one spend (inc VAT) | £1,150.00 |
Day 1 spend (inc VAT) | £115.89 |
|
| Year 1 = 40% of cash price | £400.00 |
Year 1 = 4 quarters @ | £403.08 |
|
| Year 2 = 25% of Year 1 value | £150.00 |
Year 2 = 4 quarters @ | £403.08 |
|
| Year 3 = 25% of Year 2 value | £112.50 |
Year 3 = 4 quarters @ | £403.08 |
|
| Total allowable expenditure after 3 years | £662.50 |
Total offset as a trading expense | £1,209.24 |
|
| Tax advantage | £546.74 |
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Please note that Keylink Ltd is not a financial advisor and that this guidance is given in good faith and without liability. We recommend that you always speak to an authorised finacial advisor before making any decisions.