Are you looking to purchase equipment on a finance lease?
A finance lease by definition is a financial agreement in which a finance company pays for equipment that a customer wants, such as a vehicle or a coffee machine, and the customer pays them ‘rent’ to use it. Depending on the agreement, the customer may own the goods or buy them for a reduced price at the end of the lease.
Finance lease rentals are, at this current time, 100% tax allowable and there are circumstances where it is still the most tax efficient option compared to alternative asset finance agreements, such as hire purchase.
Businesses may choose a finance lease over a hire purchase agreement as they will be able to spread the cost of the VAT over monthly payments, or because they can show the finance lease as an operating cost and offset the rentals against profit.
Typically, a funder will agree an initial rental period with your business, where the agreed fixed monthly payments cover the capital cost plus interest.
At the end of this initial rental period you may be given a few options. Continue to lease / rent the asset, in to what is known as secondary rentals (at times cheaper than the original payments). Sell the asset and potentially keep a share of the sale price or return the asset to the finance company.