Finance Solutions

Best of Finance

Competitive Rates
We offer competitive financing terms that provide an extremely cost effective way of acquiring your machine. These terms are packaged via both constant and varying promotional offers, supported by flexible subsidised finance.

Fast and Effective
Convenient one-stop financing for your machinery requirements, with straightforward quotations and a simple application process. Our aim is to take the time, effort and uncertainty out of purchasing machinery.

Tailored Solutions
Finance plays a key part in your purchasing decision, so it’s no surprise that we are able to offer a number of retail finance options, including: Hire Purchase, Finance Lease and Operating Lease. Tailor and time your repayments to improve your cash-flow and profit margins.

Hire Purchase

Benefits:

• Fixed cost and fixed repayments support confident budgeting.
• The asset appears on the balance sheet of the business.
• VAT reclaimable in full at the outset if the business is VAT registered.
• Capital (tax) allowances available from the outset and interest can normally be offset as a business expense.

Hire purchase provides the benefits of ownership without incurring the full capital outlay at the outset. Payments are agreed in advance and fixed for the life of the agreement. The full VAT or the VAT difference if a part exchange is included, is normally payable on signing the agreement but can be reclaimed in the normal way since the finance agreement is acceptable as a VAT invoice. Title passes at the end of the agreement when the payments are complete and the option to purchase exercised.

However, because the intention to purchase exists from the outset, capital tax allowances and other available relief can be claimed from the point the equipment is brought into use. The machine must be comprehensively insured by the purchaser.

Finance Lease

Benefits:

• Size and timing of rentals agreed in advance to support confident budgeting.
• Rentals normally fully allowable against taxable profit.
• Asset can be treated as “on balance sheet”.
• VAT is paid on each and every rental payment as and when it falls due, this can have a positive effect on initial cashflow.
• Lessee benefits from sale proceeds on disposal following the end of the primary period, so repays careful use.

Divided into Primary and Secondary Periods. In primary period lessee (the Hirer) pays rentals based on amount financed plus interest. At the end of the primary period lessee can dispose of goods acting as agent of lessor (the Finance Company). Lessee normally benefits from rebate of rentals (based on sale proceeds).

If the lessee wishes to continue to use equipment after the end of the primary period, the option exists to extend lease into Secondary Period. Annual Secondary Period Rentals (SPR) are paid each year equipment is retained by the lessee. SPR is a small % of original equipment cost. All the rentals paid (including any deposit paid or part exchange that forms part of the deal, which become the initial rental) are normally fully allowable as a business expense in the year that they are paid. VAT is paid on each rental as it falls due. The machine must be comprehensively insured by the lessee.

Operation Lease

Benefits:

• Fixed rentals can be lower reflecting the residual value, particularly in shorter agreements, and capital outlay is reduced.
• Enables machinery to be kept up to date, valuable where technology is changing rapidly or use is intensive.
• Off balance sheet funding which can enhance financial ratios.
• VAT is paid on each and every rental payment as and when it falls due, this can have a positive effect on initial cashflow.
• Lessor bears the risk of residual losses on the equipment.
• Rentals normally fully allowable as a business expense in the year they are paid.

Designed for hirers who merely want the use of a machine without the “risks and rewards of ownership” – in particular, an interest in the disposal proceeds (residual value). The hirer pays rentals based on equipment cost less a projected future disposal value. The lessor (finance company) estimates and underwrites the residual value and as the owner, takes full risk on this. The period of hire and rentals are fixed in advance, normally between 24 – 60 months (and in the case of powered machinery a stipulation of maximum hours) with the equipment being returned to the lessor at the end of the agreement. Under a simple operating lease, the lessee is responsible for all operating costs including servicing, maintenance, insurance and repairs, since the machine must be returned to the lessor at the end of the agreement in full working order and in a condition that is specified at the outset. Rentals are normally fully allowable against taxable income as a business expense and VAT is paid on each rental as it falls due.

Purchase V’s Lease

In broad terms there are only two ways for a business, an individual or an organisation to acquire anything, – either it can buy it or hire / rent it. The difference is ownership or “title” to the goods. Purchasers get title either immediately – e.g., cash, cheque and loans or, under some forms of finance agreement on completion. Under a lease, the finance company (the lessor) buys the goods and then hires these to the lessee. Under a lease, title never passes to the lessee.

Both are treated differently for tax relief against income and for VAT.

Finance providers will be happy to talk to you and your accountant about the finance options and tax benefits available.