Hire Purchase / Lease Purchase

A straightforward repayment facility where the customer will ultimately own the asset. Repayments can be structured in a flexible way using a deposit, initial payments and/or a 'balloon payment' (final lump sum). The full VAT is payable at the commencement of the agreement.

 

Key features and benefits:

  • Ultimate ownership.

  • Ownership normally carries the potential for claiming writing down allowances and/or capital grants, including any enhanced first year allowances of 40% of the capital cost & then 25% per annum on a reducing balance basis.

  • VAT on the cost of the asset is normally reclaimable.

  • The interest can be fixed or variable interest rate.

  • The interest element of repayments can normally be offset against taxable profit.

  • The asset appears on your balance sheet.

 

Finance Lease

A popular, flexible method of funding, which offers all the practical benefits of ownership.

 

Key features and benefits:

  • When the asset is sold you normally receive the majority share of the sale proceeds, typically 95%.

  • The flexible repayment structure gives you immediate and full use of the asset for a minimal outlay.

  • Rentals can normally be offset 100% against taxable profit, spread over the economic life of the asset, typically 5 years.

  • Asset treated as 'on-balance sheet', showing as an asset.

  • VAT is paid on the rentals not the purchase price.

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Operating Lease

A residual value in the machine tool typically reduces the rentals, thus helping cash flow and making 'off-balance sheet' funding possible. This type of agreement is effectively a long term rental.

 

Key features and benefits:

  • The customer bears none of the residual risk on the equipment's value.

  • Rentals can normally be offset 100% against taxable profit.

  • Asset normally treated as 'off-balance sheet' (subject to your auditors' approval).