Leasing New Machines
Leasing Taski Cleaning Machines
What are the financial benefits of leasing purchase commercial floor cleaning equipment for your business ?
Every monthly payment is 100% tax deductible
The main reason that the majority of companies lease rather than purchase equipment is that they use leasing as a method of reducing their tax bills.
This is because lease rental/purchase is 100% tax deductible, and all payments made for the equipment are written off against the company’s tax bill.
For any profit-making business, this means a substantial saving in the real cost of acquiring equipment by lease rental.
This could mean a saving of between 20-40% of the lease payments, depending on the rate of tax you pay*.
Payments on qualifying leases are written off as direct operating expenses, rather than a debt or outstanding liability, thus reducing short term taxable income.
Any capital allowances are passed on to you, and lease payments can be offset against taxable profits
VAT can also be reclaimed on monthly payments. This status as a “lease” as opposed to a “liability” on a company’s balance sheet is something the banks like to see, which is why an operating lease can be attractive. For this reason, leasing is often referred to as ‘off balance sheet’ financing – a tremendous advantage to both large and small businesses
Ownership and the end of the lease ?
Lease rental/purchase is just that, a rental where title of the goods remains with the Lessor which means the equipment does not show on the company’s balance sheet, therefore not needing to be depreciated over a fixed period.
The funder of initial capital are a “third party” involved within the agreement. They buy the equipment and will relinquish title end the end of the lease period to the customer for set payment, (agreed at the start of lease) after which have no further financial interest in the equipment. This means that the customer can take full advantage of all the benefits of leasing.
Other benefits of leasing
• Finance Leases offer flexibility in terms of length of agreement, rental repayment profile and end of lease options.
• Unlike making an outright purchase, you will retain cash within your business.
• Effective financial planning. The lease repayment profile gives you confidence in being able to budget for the lifetime of the asset.
• Using the latest assets will ensure you remain competitive by keeping your costs low.
• Fast turnaround times
• Potential to carry on using the asset at the end of the lease period for a nominal payment,
• Alternatively you can look to upgrade the equipment with another lease.