finance

Finance We can provide finance facilities for the purchase or rental of Commercial Machinery. There are a number of advantages associated with financing these are:
Tax Benefits	On lease rental agreements all payments made are 100% allowable as an expense for tax purposes, often providing tax savings
Join the majority	Some 85% of the Times Top 100 companies use lease finance to acquire Business Assets
Have what you need now	Have the equipment that is best for your business without capital expenditure. When you lease you are not restricted to the equipment you can afford at the time
Cash is King	Use your cash where it will produce the best return in investment and operating activities
Keep your options open	Retain your cash, bank facilities and other credit lines for more appropriate uses, such as working capital and short term funding needs. The equipment you need can be acquired without affecting other credit lines making further borrowing easier
Improve Financial control	Your finance payments will be fixed for the whole finance period avoiding the effects of inflation, making cash flow forecasting and budgeting simpler. You are protected from interest rate changes so will always know how much your future payments will be
Remain flexible	You can upgrade to new equipment if your requirements change. In many cases, by extending the length of the facility, you can acquire extra equipment without an increase in your payments Lease Rental v Cash Purchase example

Model showing differences in tax relief available with rates
Based on the assumption that the business has been trading over 3 years


This example assumes the following costs and rate of tax

	Invoice value		£5,000.00
	Frequency		Monthly
	Lease Period		3 years
	Highest tax rate		40%

Figures exclude VAT and assume customer is a tax paying organisation


Lease Rental

Tax relief is available on all rentals at the highest tax rate you pay.


Year	Rentals payable in year		Total	Tax relief


1	12 months at	£170.50	£2,046.00	£818.40
2	12 months at	£170.50	£2,046.00	£818.40
3	12 months at	£170.50	£2,046.00	£818.40


Total tax relief over 3 yr period				£2,455.20


Cash Purchase

Tax relief is only available on the capital allowances on the equipment.
For SMEs this is currently 40% of the cost in the first year and 25% in subsequent
years based on a reducing balance each year.


Year	Capital Allowance in year		Total	Tax relief


1	40% of	£5,000.00	£2,000.00	£800.00
2	25% of	£3,000.00	£750.00	£300.00
3	25% of	£2,250.00	£562.50	£225.00


Total tax relief over 3 yr period				£1,325.00



In addition to the tax benefits you may obtain by leasing your new equipment, there
are many other benefits.

Cash purchase has an immediate impact on cash flow; you may be able to use the
money elsewhere in the business. Purchase may reduce your flexibility, but
leasing makes it easy for you to upgrade and add to your equipment as your needs
change.

If you are considering a bank loan or overdraft facility to fund your purchase, bear
in mind that this will utilise some of your available credit and may affect your ability
to obtain or increase an overdraft to meet working capital needs. Your loan or
overdraft may be repayable on demand; no-one will "foreclose" on your lease
whilst payments are being made. Your bank may also ask for extra security such
as a debenture over book debt or a charge on your property.