Why Lease?

Leasing is probably the most popular method of financing plant, machinery and other equipment for businesses. Virtually any item of equipment can be leased, and although it may be able to afford to buy the equipment outright, it is worth considering:

  • All leasing payments are rental payments, and as such are an allowable business expense; therefore if a business is making profits, they reduce the profit by the amount of the rentals paid each year, which in turn reduces the tax bill.

  • Lease payments are normally the same throughout the lease contract. This means that increases in interest rates do not affect the budget, and so cash flow forecasting is easier.

  • Leasing enables cash to be used for other purchases such as small purchases, staff training, advertising, new business opportunities and unexpected expenses.

How Does Leasing Work?

The leasing company buys and owns the equipment, which the business rents for a predetermined period.

At the end of the term, the agreement can usually be extended, but there is an option to return the equipment, or buy it outright by paying one more month’s instalment – this is the most popular option, for obvious reasons.

Are there tax benefits associated with leasing?

Yes - any business wishing to acquire capital equipment should seek the most tax efficient way when doing this. All lease payments are treated as an allowable business expense, and therefore attract tax relief for the full duration of the Lease agreement.

Finance lease or operating leases?

Most customers choose a Finance Lease for gym equipment as they have the option to own it at the end of the term. With an Operating Lease, ownership is not possible, so it works more like a long term hire.  For Schools, Colleges and Universities, the UK government now allows Lease Hire contracts as well as Operating Leases.

All payments shown are subject to status and VAT at the relevant rate. We advise that before committing to any lease you discuss all options with your accountant regarding suitability and potential tax benefits.