In the case of a Finance Lease, you get full use of the equipment but legal ownership is retained by a finance company for the duration of the lease. In effect the finance company purchases the equipment or vehicle and then leases it to you for a fixed monthly payment over a fixed period. Like rental costs you will have to pay VAT on these payments but unlike renting you do have an equity interest in the asset.
The benefits of this sort of arrangement are that your cashflow improves as you don’t have to pay VAT on the purchase and payments are usually fully chargeable against profits. There’s a known/planned payment and commitment and there would be the option of extending the agreement into a secondary period. You can still show the asset on your balance sheet aswell, if you wish. We can also arrange your refinance using a Lease Agreement and will be referred to as Sale and Lease Back.
PLEASE NOTE: THIS INFORMATION IS PROVIDED AS A GENERAL GUIDE ONLY. WE WOULD ALWAYS RECOMMEND THAT YOU SEEK INDEPENDENT TAXATION ADVICE IN ALL CASES.