For a business requiring the combination of a minimal outlay with maximum tax efficiency, Finance Leasing provides an alternative to contract hire. Although the business will never actually own the vehicle, finance leasing allows many of the benefits associated with ownership available to the business, while at the same time offering significant tax advantages.
If your business is registered for VAT, 100% of the VAT payable on the finance element of the rentals may be recovered where the vehicle is either a van or a car used solely for business purposes. Where the vehicle is a car used for business and private mileage, then only 50% of the VAT payable on the finance may be recovered.
For the duration of the Finance Lease agreement, the vehicle will be shown as a 'leased asset' within your balance sheet. Rentals are treated as a revenue expense and may be offset against your taxable profits. Furthermore, rentals can be tailored to match the cash flow of your business, with a “balloon” rental being used to defer part of the vehicles initial cost.
If your business is registered for VAT, 100% of the VAT payable on the finance element of the rentals may be recovered where the vehicle is either a van or a car used solely for business purposes. Where the vehicle is a car used for business and private mileage, then only 50% of the VAT payable on the finance may be recovered.
If your business is registered for VAT,100% of the VAT on the Finance Lease may be recovered where the vehicle is either a van or a car used solely for business purposes. Where the vehicle is a car used for business and private mileage then only 50% of the VAT payable on the finance element of the rentals may be recovered. At the end of the agreed lease period, the vehicle is sold and the proceeds are used to clear any “balloon” payment. If the sale proceeds do not cover this amount, then the lessee must make up the shortfall. Should the proceeds exceed the “balloon” then the difference will be refunded as rebate of rentals.
If your business is registered for VAT, 100% of the VAT payable on the finance element of the rentals may be recovered where the vehicle is either a van or a car used solely for business purposes. Where the vehicle is a car used for business and private mileage, then only 50% of the VAT payable on the finance may be recovered.