Leasing allows your business to free up cash previously spent buying equipment outright in a tax efficient manner.
By leasing, as opposed to using cash in an outright purchase, the cash can be retained and used to grow the business.
Leasing is a rental agreement between your company and the supplier which allows you to acquire equipment you need to run your business without a large capital expenditure. It involves a contract between you and the finance company.
Nowadays it is a range of banks, independent leasing companies and increasingly manufacturers themselves, who act as lessors or operate affiliated leasing companies. Although asset finance is less well known than debt or equity funding it is an important way of letting growing businesses release cash. According to the trade body, the Finance and Leasing Association, its members account for close to £70bn of outstanding finance.
Tax and accounting benefits
With 100% allowances, you can potentially save between 20-40% of the cost of the lease, depending on the rate of tax you pay.
There are tax and accounting benefits to companies which choose to lease rather than buy. Leasing costs are classified as an expense rather than a debt or outstanding liability which means that your options for debt financing or credit remain more flexible.
This status as a lease as opposed to a liability on your balance sheet is also something the banks like to see. Your FD or your bank will have guidelines on how to maximise your balance sheet. They know how they want your financial accounts to look at year end, which is why an operating lease can be so attractive.
In terms of tax, one clear advantage is that a lease is 100% tax allowable, which means that your regular payments to the leasing firm are completely written off your taxable profit for the year. This could potentially save between 20-40% of the cost of the lease, depending on the rate of tax you pay.
Acquire the equipment you need now whilst retaining your working capital for other purposes.
It does not matter if you’re your own boss or if you manage a large workforce. There is one thing you can be certain about – you have to be as competitive as possible in today’s fast moving market. Primus understands this and therefore provides flexible and competitive leasing options, tailored to suit your needs and your budget. Why wait. Get the high quality solutions you need NOW and let Primus organise the finance for you, helping you stay one step ahead!
Key Benefits
IMMEDIATE ACQUISITION OF EQUIPMENT
You can acquire the equipment that is needed now, not when the cost meets budgeting requirements.
CONSERVES WORKING CAPITAL
Capital can be employed for other profitable purposes. Further, because we are supplying an alternative line of credit, existing credit lines remain undisturbed.
TAX ADVANTAGES
100% of all lease payments can be offset against company profit.
PLANNED BUDGETING
By structuring the facility for you the payments can be aligned with your cash flow needs.
TECHNOLOGY REFRESH
A technology refresh policy can be incorporated into the lease.
BUILT IN FLEXIBILITY
Early settlement and upgrade of equipment is available during the lease period.