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Frequently Asked
Questions
How can
it be cheaper to lease than
to buy outright?
Because the full annual
cost of leasing is classed as
a legitimate business expense
each year whereas generally*
only a maximum of 40% of the
cost of an outright purchase
can be claimed as a
legitimate business expense
in the first year, and then
25% of the residual value in
each of the following years.
Also, as the capital cost is
spread over a number of years
not only does this
dramatically improve cash
flow, it means you can earn
interest on the money you
have saved on the up-front
cost. Whilst at the same time
the real cost of the
repayments are actually
eroded each year by the
annual rate of inflation. The
end result is a proven saving
of 15% to 30% of the
“cash price”,
even after allowing for the
interest charged by the
leasing company.
Can I take ownership of
the asset at the end of the
lease?
Yes you can, but this must
be done through a third party
such as Technology Leasing,
in order for you to retain
the tax savings. That’s
why at the end of the lease
there is normally an
administration fee,
equivalent to half of one
month’s repayment, to
transfer the ownership of the
asset to you.
Do I have to take
ownership of the asset at the
end of the lease?
No, this is just one of
the options that is open to
you, depending on what you
want to do. For example you
may want to continue to rent
the asset at a reduced
monthly fee that just covers
the continued maintenance
charges.
Can
I change my purchase for
something better during the
term of the lease?
Yes you can. Once you have
reached a suitable agreement
with your supplier you can
provide these details to us
and we will advise you of any
necessary changes to the
repayment amount and/or the
term of the
lease.
What about warranties
and dealer support?
These will be just the
same as if you purchased the
asset outright, although it
is obviously much easier to
include any maintenance
charges as part of the
overall lease agreement and
include them in the regular
fixed repayment.
What about VAT?
The lease agreement will
be based on the net price of
the purchase excluding VAT as
the leasing company will pay
the VAT and then reclaim it
as part of their business
expense. They will then
charge VAT on the lease
repayments, which you can
then reclaim in the normal
way.
What
about if I want to buy
different parts of the
solution from different
suppliers?
No problem, just let us
have all the details and we
will take care of it by
presenting you with a single
lease agreement that covers
all the suppliers involved.
We will then settle ALL their
invoices for you and
consolidate everything into a
single monthly or quarterly
payment.
Is
there a minimum value for a
lease agreement?
It depends on the type of
asset being purchased but
normally £1,000 is
regarded as the minimum value
by most leasing companies.
This may be increased to say
£3,000 for less
tangible assets such as
computer software
etc.
Is there
anything that can’t be
leased?
Anything that is based on
a variable charge, such as
man-hours, cannot be leased
unless agreement can be
reached on a fixed fee with
the vendor. This fee can then
be included as part of a
packaged solution that
involves more tangible
assets. Otherwise, almost
anything can be leased
providing you have access to
a good broker, like
Technology Leasing.
(*Higher allowances are
only available where the
purchase is for energy saving
plant and machinery)
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