Our leasing agreements are through
a number of leasing companies that are registered members
of the Finance and Leasing Association, including Siemens
Financial Services (previously known as Shroeder Leasing),
an international financial services company, part of the
Siemens AG Group, with an international presence in more
than 30 countries. Terms and conditions are written in plain
English and full details on total costs payable over the
period are crystal clear before the agreement commences.
All agreements are for a fixed amount for a fixed period
(any period up to 5 years maximum).
- Fixed rentals - to allow you to budget.
- Flexible repayments - to meet your required needs.
- Flexibility to upgrade - you can benefit from the
latest technology at all times.
- No initial capital outlay - the first payment only
needs to be for one quarter rather than the total value
of the equipment.
- Existing borrowings remain unaffected - other credit
lines will not be affected.
- Rentals are 100% tax deductable - all rentals can
be offset against taxable profits, therefore making
it attractive from a cash flow perspective.
Cash vs Lease
With a simple calculation we can show
you the comparison between a hire agreement and a cash purchase.
With a hire agreement, tax relief is available on all rentals
at the highest tax rate you pay.
A cash purchase will only allow tax relief only on the capital
allowances on the equipment. This is currently 40% of the
cost in the first year and only 25% in subsequent years
based on a reducing balance each year.
Example:
This is a model showing the difference in tax relief available.
Invoice Value |
£5000 |
Lease period |
3 Years |
Frequency |
Quarterly |
Highest tax rate |
40% |
These figures
exclude VAT and assume the customer is a tax paying
organisation |
Option 1: Lease Rental
Tax relief is available on all rentals at the highest rate
you pay
Year |
Rentals Payable |
Total |
Tax Relief |
1 |
4 quarters at £511.50 |
£2046.00 |
£818.40 |
2 |
4 quarters at £511.50 |
£2046.00 |
£818.40 |
3 |
4 quarters at £511.50 |
£2046.00 |
£818.40 |
Total tax relief
over 3 years period: |
£2455.20 |
Option 2: Cash Purchase
Tax relief is only available on the capital allowances on
the equipment. Currently 40% in the first year and less
in subsequent years.
Year |
Capital Allowance |
Total |
Tax Relief |
1 |
40% of £5000.00 |
£2000.00 |
£800.00 |
2 |
25% of £3000.00 |
£750.00 |
£300.00 |
3 |
25% of £2250.00 |
£562.50 |
£225.00 |
Total tax relief
over 3 years period: |
£1325.00 |
The Difference
Lease Rental
Breakdown |
Cash Purchase
Breakdown |
Total Payments |
£6138.00 |
Total Payments |
£5000.00 |
Less Tax Relief |
£2455.20 |
Less Tax Relief |
£1325.00 |
Difference |
£3682.80 |
Difference |
£3675.00 |
Difference equals
net amount payable after tax relief |
From the above example, the benefit
received from the increased tax relief covers, or exceeds,
the hire charges paid over and above the purchase price
of the equipment.
Telephone ABT for more details.
Freephone 0800 389 1304 - Fax 020 8691 4503 or 0208 694
2716
4-6 Evelyn Court, Deptford Park Business center, Grinstead
Road, Deptford, London SE8 5AD, UK
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