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Are through a number of leasing companies
that are registered members of the Finance and Leasing Association,
including Siemens Financial Services (previously known as Shroeder Leasing),
an international financial services company, part of the Siemens AG
Group, with an international presence in more than 30 countries..
Terms and conditions are written in plain English and full details on
total costs payable over the period are crystal clear before the agreement
commences. All agreements are for a fixed amount for a fixed period
(any period up to 5 years maximum).
- Fixed rentals - to allow you
to budget.
- Flexible repayments -
to meet
your required needs.
- Flexibility to upgrade -
you
can benefit from the latest technology at all times.
- No initial capital outlay -
the
first payment only needs to be for one quarter rather than the total
value of the equipment.
- Existing borrowings remain unaffected
-
other credit lines will not be affected.
- Rentals are 100% tax deductable -
all rentals can be offset against taxable profits, therefore making
it attractive from a cash flow perspective.
Cash vs Lease
With a simple calculation we can show you
the comparison between a hire agreement and a cash purchase. With a
hire agreement, tax relief is available on all rentals at the highest
tax rate you pay.
A cash purchase will only allow tax relief
only on the capital allowances on the equipment. This is currently 40%
of the cost in the first year and only 25% in subsequent years based
on a reducing balance each year.
Example:
This is a model showing the difference in tax relief available.
| Invoice Value |
£5000
|
Lease period
|
3 Years
|
| Frequency |
Quarterly
|
Highest tax rate
|
40%
|
| These figures exclude
VAT and assume the customer is a tax paying organisation |
Option 1: Lease Rental
Tax relief is available on all rentals at the highest rate you pay
| Year |
Rentals Payable
|
Total
|
Tax Relief
|
| 1 |
4 quarters at £511.50
|
£2046.00
|
£818.40
|
| 2 |
4 quarters at £511.50
|
£2046.00
|
£818.40
|
| 3 |
4 quarters at £511.50
|
£2046.00
|
£818.40
|
|
Total tax relief
over 3 years period:
|
£2455.20
|
Option 2: Cash Purchase
Tax relief is only available on the capital allowances on the equipment. Currently 40% in the first year and less in subsequent years.
| Year |
Capital Allowance
|
Total
|
Tax Relief
|
| 1 |
40% of £5000.00
|
£2000.00
|
£800.00
|
| 2 |
25% of £3000.00
|
£750.00
|
£300.00
|
| 3 |
25% of £2250.00
|
£562.50
|
£225.00
|
|
Total
tax relief over 3 years period:
|
£1325.00
|
The Difference
| Lease
Rental Breakdown |
Cash
Purchase Breakdown |
| Total Payments |
£6138.00 |
Total Payments |
£5000.00 |
| Less Tax Relief |
£2455.20 |
Less Tax Relief |
£1325.00 |
| Difference |
£3682.80 |
Difference |
£3675.00 |
| Difference
equals net amount payable after tax relief |
From the above example, the benefit received
from the increased tax relief covers, or exceeds, the hire charges paid
over and above the purchase price of the equipment.
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