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Business Leasing? providing the cost of your PC/Laptop is more than
£500.00 +VAT then we can help. An Overview of Leasing
Lease Finance/Business Finance
You want a new laptop but think that it's a lot to pay out in one go, now you don't have to worry about finding the lump sum, our business leasing facility enables you to make the most of your budget by spreading the cost of your purchase over three years. This can make a big difference to your cash flow if you are buying for a whole department or company. Because we deal with leasing providers who specialise in IT finance, you are able to lease the entire system including accessories and software. You can even upgrade your system before the end of your lease.
What is Leasing?
Leasing is a financial contract between your company and a leasing company. You will be committed to repay a given number of fixed rentals for the term of the contract, (for example 36 monthly payments of £50+vat). We supply the goods to you and we are paid by the leasing company, you are effectively renting the goods from the leasing company for the duration of the lease. The goods are owned by the leasing company at all times until the end of the lease when you have the option to buy via ourselves, see below . Because you are renting and not buying the goods you can claim 100% tax allowance on the payment.
Who can apply?
Lease finance is available to UK mainland business customers only, which includes sole traders, partnerships, limited companies, PLC's, national and local government departments, schools, universities, hospitals & charities. The average minimum price that would qualify for a lease is about £500 + VAT and there is virtually no upper limit. Due to the tax laws that apply to leasing we unable to offer this service to customers in Isle of Man, Republic of Ireland or channel Isles.
PLEASE NOTE : Small Businesses that have been trading for less than 18 months may have problems obtaining a lease due to the lack trading and credit history available to the leasing company to make an application decision.
Bad news - Good news
The news that the government were to remove the 100% tax allowance on IT purchases this year caused panic buying just before the deadline date of April 30th, but if you lease your IT equipment you can still get this 100% tax allowance and that's been going on for years and will continue to for as long anyone can see.
Easy to arrange
It is very easy to arrange a lease, just call us with your requirements and we will give you a total weekly figure providing that the total cost is greater than £500 + VAT (unfortunately, we can not lease used equipment).
We handle all the paperwork and all you have to do is sign the appropriate forms which are sent to you.
Educational/public sector special rates
If you are looking for finance for state schools, universities, national and local government departments and hospitals we can offer highly competitive rates or deferred payments. Please call to discuss your requirements.
The Advantages of leasing
Whether you are a sole trader, a PLC or a government dept., cash flow is the life blood of business. When it comes to spending large chunks of it on IT equipment, sooner or later the same question will come up; is it better to buy the equipment outright or to lease it. Below we will try to show you that from a cash flow point of view leasing has considerable advantages to your cash flow.
An up and coming sales company has decided that it needs to update it's aging servers. They have decided that the network upgrade will cost a total of £11,750 inc VAT, they have also decided that they expect to expand further within in the next 3 years to ensure that they don't fall behind the technology stakes again, the following two scenarios show the financial benefits of leasing vs buying.
Scenario 1 - Buying outright
Our company buys the new servers for a total of £10,000 + VAT, Immediately they are £11,175 down but as they are VAT registered they can claim the VAT back at the end of the current quarter in 3 months time.
And that's it, your money is tied up in the new equipment, so if you had other plans for the £10k then you're going have to get it from elsewhere. Over the next three years our company can claim back 25% of the balance per year.
Initial Purchase Price £10,000
Year 1
25% of £10,000 = £2500 - Balance = £7,500
Year 2
25% of £7,500 = £1875 - Balance = £5,625
Year 3
25% of £5,625 = £1,406 - Balance = £4,219
So at the end of the servers expected working life our company has been able to claim £5,781 against pre tax profits.
Scenario 2 - Lease Rental
Our company leases the servers over a 3 year period paying 1 initial payment of £343 + VAT, then 35 monthly payments of £343 + VAT. So out of their original £10,000 + VAT budget they still have £9657 to spend on stock which they can sell for a profit, something that could not have been done if they had bought the equipment outright. This really is a case of having your cake and eating it.
But there's more. Not only does our company retain the money to spend on more stock, but the payments they make on the lease are 100% tax allowable against pre-tax profits. As shown below:
Year 1
100% of £4,116 (12 x £343)
Year 2
100% of £4,116 (12 x £343)
Year 3
100% of £4,116 (12 x £343)
Total that can be claimed back against pre tax profits is £12,348.
Even though the lease rental has a higher cost of £2,348 + the £10,000 over the 3 years, the ability to claim all of this back compared to the £5,781 for the outright purchase shows the tax benefits of leasing.
Cash flow - Keep your money working for you
Instead of having to pay out a lump sum you can spread the cost of your laptop and software over its useful working life.
No additional security required
Leasing is entirely separate from any bank lending or other credit arrangements you may have. By leasing equipment, your overdraft or bank loans are free for use in running your business.
Tax benefits - 100% allowable against pre-tax profits
Leasing is fully allowable against tax. All payments are 100% tax efficient. Traditional Hire Purchase is not as tax efficient and therefore may cost more in the long run even if it initially looks cheaper.
Fixed budgeting
No deposits are required and you know exactly what you will be paying per month for the term of the lease. Your lease costs are fixed for the duration of the agreement and as such are unaffected by interest rate changes or other external factors. You can include each year's rentals in your annual budget and remove any guesswork from your financial forecasting.
Upgrade facility
As your business grows, and technology is constantly changing, you can upgrade your equipment on lease at any point during the lease term, and either extend the term and keep the repayments the same or renegotiating a new lease.
General leasing Information
How often do I pay ?
A deposit equal to 1 payment + vat (either a month or a quarter depending upon the lease) will be required on the acceptance of your business by the lease company and before any goods can be delivered, you will then pay monthly or quarterly over 3 years by direct debit. Other payment periods and options are available to Local and national government depts., schools , universities, hospitals etc, call for more details.
When do I pay?
The initial deposit (see above) will be required before the goods are delivered, you will then normally pay the first rental about 7-10 days or so after the goods are delivered. The second and subsequent rentals will follow at monthly or quarterly intervals according the lease agreement.
What happens if the equipment develops a fault ?
Your warranty is still covered by the manufacturer, so you would speak to us first as the supplier. If you have a problem you must continue to pay the the rentals or you will break your contract with the leasing company. Think of it this way, if you got a loan from a bank to buy car, you would not go back to the bank to get your car fixed if it broke down, you would go back to the garage you bought it from.
What happens at the end of the lease?
When your lease term comes to an end you can elect to do one of the following:
1. You can either continue to pay the lease at a reduced rate and keep the equipment.
2. Upgrade to a newer model and renew the lease.
3. Give the equipment back and end the lease.
And Finally, Important things to remember about leasing in general:
The equipment does not belong to you, hence you cannot sell it.
A document fee is charged by the finance company and is payable with the first rental payment.
You must keep the equipment insured under your insurance policy, if it is broken or stolen you will be liable for its replacement or repair.
Interest charges can be levied for late payment.
The rentals will only change if there is a change in taxation rates i.e VAT goes up or down.
The finance company are under no circumstances responsible for the quality or maintenance of the equipment and any warranty issues that may arise.
Always read the terms and conditions carefully before entering into any lease agreement.
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