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Finance
Lease is a tax efficient option where the customer chooses to pay either
the entire cost of the vehicle, including interest charges, over an
agreed lease period or opts to pay lower monthly rentals with a final
balloon payment based on the anticipated resale value of the vehicle.
Therefore, customers benefit through fixed costs but do take on the
administration and operating risks. At the conclusion of the contract
the customer can continue to operate the vehicle under a "peppercorn
agreement" although at no time will take ownership of the vehicle.
Customers
choose the exact model, specify any options and choose the colour etc.
Both new and used vehicles (up to 12 months old) are available and
contracts can last anywhere between 2 and 5 years, with vehicles
covering up to 150,000 miles.
The other
key benefits of Finance Lease are:
- Fixed
Monthly Rentals
A fixed
monthly payment is charged over the life of the lease and the initial
payment is normally equivalent to just three month's rentals. Fixed
costs make budgeting much easier. In turn more accurate budgeting can
help to improve cashflow.
- VAT
Benefits
As
leasing companies can claim back 100% of the VAT on new vehicles,
Finance Lease
rentals are calculated taking into account the pre-VAT price. This
benefit is then passed to customers in the way of reduced rentals. Once
the vehicle is on the road, VAT registered customers can claim back 50% of the VAT on
the finance rental cost*.
*If the
vehicle is a car. Alternatively, if a van or other commercial then 100%
of the VAT can be claimed back.
- On
Balance-Sheet Funding
Although
the ownership of the vehicles remains with the leasing company for the
duration of the contract, they do appear on the customers balance sheet,
with the capital element of the outstanding rentals acting as the
subsequent liability.
The
rentals paid can be offset against taxable profits, although a
proportion of the payments relating to the excess value of the vehicle
over and above £12,000 are disallowed.
- Reducing
Administrative Hassles
As Key
Vehicle Solutions supply any make of vehicle the customer's paperwork and ongoing
administration is kept to a bare minimum.
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Quote Line: 0845 166 2405
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