A Lease facility allows a business to acquire high value equipment without having to part with the large capital outlay which can impact on cash flow. Fixed monthly payments are made over an agreed fixed period usually between 1-5 years. VAT is charged each month at the prevailing rate and not upfront on the capital sum. In some cases the energy savings per month can be equal to or less then the net monthly lease payments.
Monthly payments are guaranteed not to increase regardless of interest rates fluctuations which acts as a hedge against inflation. This is commercial funding facility so therefore cannot be offered to a private individuals. All lease payments are fully eligible for tax allowances. The payments are treated as a trading expense and are 100% tax deductible unlike most other forms of finance. The rate of tax allowance will depend on individual corporation tax figures. At the end of the lease period the equipment is transferred to the businessâ€™s assets following a Secondary Purchase Payment (SPP) which is a nominal payment agreed at the start of the lease.
When compressed air equipment needs upgrading or replacing it is essential that the correct energy efficient system is obtained. Not only will energy costs be reduced, an Enhanced Capital Allowance (ECA) can be claimed if energy efficiency equipment listed on the Energy Technology List (ETL) is purchased.