|
LEASE
Introduction
The hirer enjoys all the benefits of vehicle usage,
whilst legal ownership is retained by the leasing
company.
How it works
Initial rental is paid on delivery and monthly rentals
are payable over an agreed primary period with the
option of a secondary period of hire, usually not
exceeding five years. On conclusion of the agreement,
the vehicle must be sold to an independent VAT registered
party; in practice this tends to be the dealership.
Benefits
• Offers tax benefits for some companies
• Low initial outlay - usually 3 - 6 months
rentals in advance
• Rentals appear on balance sheet as you own
the worth of the vehicle
• Releases cash flow
• Tailored rental agreements for easy budgeting
• Up to 100% of net sales value refunded
Business Tax
As you do not have ownership of the vehicle you
cannot claim the “Written Down Allowance”.
Instead, you are able to offset up to 100% of lease
rentals against your taxable profit, thus reducing
your tax liability. For cars with a retail price
over £12,000, tax relief is restricted with
a diminishing proportion of rentals being offset.
VAT Implications
As the Lease company can reclaim all the VAT on
the vehicle, rentals are calculated on the VAT exclusive
price. The rentals attract VAT, of which generally
50% is reclaimable.
This information is correct at time of publication
December 2006.
Platinum is a part of Renrod Ltd.
Renrod Ltd is authorised and regulated by the Financial
Services Authority. Please ask for full terms and
conditions.
|
