| Finance
packages |
Sometimes
the world of finance can be a little confusing, so below
we have briefly outlined some of the different ways you
can fund your vehicle to give your business the most tax
efficiency.
Being in business is all about making the right decision,
so remember, before you decide on a method of funding
your vehicle, always seek advice and speak to your accountant,
that will ensure you get the right advice to suit your
business. |
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| Hire
Purchase |
- Traditional method to fund vehicle.
- Deposits range from small to large, plus full VAT
element followed by fixed period of monthly payment
for duration of agreement.
- Tax advantage through capital allowances 25% on
used vehicle/40% on new vehicles.
- Tax relief on all Hire Purchase interest payments.
- Full ownership of vehicle.
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Finance
Lease
|
- Low deposits.
- Fixed repayments which will attract VAT on a monthly
basis.
- Option at end of the agreement to either sell the
vehicle and retain up to 99% of the sale proceeds
or to take the Lease into a secondary period by paying
an annual peppercorn rental ? this rent normally equates
to an equivalent of 1 monthly payment or 4% capital
cost payment and this will continue for as long as
the client wishes.
- Leasing is a very tax efficient form of funding.
- Benefits are small deposits, VAT payable on a monthly
basis giving better cash flow, fixed price seat period.
- Rentals offset 100% ?on? balance sheet against taxable
profit.
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| Lease
Purchase |
- Lease Purchase is in essence exactly the same as
Hire Purchase but there is:
- More flexibility of deposits and monthly payments.
- Built in residual values if required which will
lower your monthly payments and aid your cashflow.
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| Contract
Hire |
- Fixed price set period.
- Contract can include or exclude full maintenance
package, whatever one wishes.
All contracts are based on an annual mileage over set
period of contract.
- Contract Hire benefits are very tax efficient form
of funding.
- Rentals offset 100% 'off' balance sheet against
taxable profit.
- No disposal or depreciation problems.
- Aids cashflow.
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