Financing For Your Cashflow Needs
AIC offer a range of options for equipment purchase to best suit your individual needs through partnerships with a selection of approved finance providers. All of our finance options are backed up with our dedicated service packages ensuring we support you throughout the life of your equipment.
The acquisition of assets, particularly capital equipment is a large commitment for many businesses. Rather than pay for the assets outright, it can make sense to look for other ways of spreading the cost of acquiring the assets to coincide with the timing of revenue generated by your business.
Call us today on 0044 2837 526157 to discuss your needs.
Hire Purchase provides the benefits of ownership without incurring the full capital outlay at the outset. Payments are agreed in advance and are fixed for the life of the agreement.
The full VAT, or the VAT difference if a part exchange is included is normally payable on signing the agreement but can be reclaimed in the normal way since the finance agreement is acceptable as a VAT invoice. Title passes at the end of the agreement when the payments are complete and the option to purchase is exercised. However, because the intention to purchase exists from the outset, capital tax allowances and the available relief can be claimed from the point the equipment is brought into use.
• Fixed cost and fixed payments support confident budgeting.
• The asset appears on the balance sheet of the business.
• VAT reclaimable in full at the outset if the business is VAT registered.
• Capital allowances are available from the outset and interest can normally be offset as a business expense.
A finance lease is divided into Primary and Secondary Periods. In the Primary Period the lessee (the Hirer) pays rentals based on the amount financed plus interest. At the end of the Primary Period the lessee can dispose of the goods. The lessee normally benefits from a rebate of rentals (based on the sale proceeds) i.e. when the equipment is sold the lessee will get most of the sale proceeds.
If the lessee wishes to continue to use the equipment after the end of the Primary Period, the option exists to extend the lease into the Secondary Period. Annual Secondary Period Rentals (SPR) are paid each year the equipment is retained by the lessee. The SPR is usually 1% of the original cost.
All the rentals paid (including any deposit paid or part exchange that form part of the deal, which become the initial rental) are normally fully allowable as a business expense in the year that they are paid. VAT is paid on each rental as it falls due.
• Size and timing of rentals agreed in advance to support confident budgeting.
• Rentals are normally fully allowable against taxable profit.
• Asset can be treated as “on balance sheet”.
• VAT is spread over the life of the agreement, which can have cash-flow value.
• Lessee benefits from the sale proceeds on disposal following the end of the Primary Period, so repays careful use.