Unlike a Hire Purchase agreement, a Finance Lease is where
ownership of the asset never passes to you.
You will be responsible for the maintenance of the equipment and
can usually deduct the full cost of Lease rentals from your taxable
income as a trading expense.
As the leasing company remains the owners of the asset, they
will claim the capital allowances and pass that benefit on to
you by reducing your rental charges.
An Operating Lease works in the same way as a Finance Lease,
but is only for part of the asset’s ‘useful life’ – the length of time
that it is considered useful for business use.
The payment you make is worked out from the
difference between the purchase price of the asset and the
predicted value of the asset at the end of the agreement.
You will ‘rent’ the asset over the agreed contract period but your
rental payments will not cover the full cost of the asset, as is the
case in a Finance Lease, as you’re only using the asset for it’s
For further information on leasing, contact us on 0115 958 6872 or email email@example.com.