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Finance Lease

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With finance lease you can choose to pay the whole cost of the vehicle over the term of the lease or offset some of the value to the end of the agreement in the form of a balloon payment.

VAT is charged on all of your payments, VAT registered business are usually able to claim back 50% of VAT on vehicles 100% of VAT on optional maintenance contracts.

When the contract ends you sell the vehicle on behalf of the vehicle funder.

Like Contract Hire you are able to offset the monthly rentals against corporation tax. Rentals paid on vehicles with Co2 emissions up to 160 g/km are fully deductible against corporation tax. However, for vehicles with emissions above 160g/km there is a disallowance of 15%.

Although the ownership of the vehicle remains with the vehicles funder for the duration of the contract, the car does appear on your balance sheet with the capital element of the outstanding rentals acting as the subsequent liability.

Benefits of Finance Lease

  • Low up-front costs - for just a small outlay, you can use the assets immediately

  • Flexible repayment structure - rental payments can be tailored to match your cash flow

  • Tax advantages - VAT is payable on the rentals, not the purchase price, while payments can normally be offset against taxable profit (special rules apply to cars)

Want to know more?

To find out more about Finance Lease and how your business can benefit contact us today for friendly advice.