Leasing is a VAT beneficial funding option, where the Hirer can choose to pay for the entire cost of the asset over an agreed period.
The Lender claims the Capital Allowances on the asset. This usually allows the Hirer to offset 100% of the rentals against Taxable income in addition to the VAT reclaimable on each rental.
The Hirer does not normally take ownership of the asset, but will normally have the option to continue hiring the asset over an extended period at the end of the primary term.
Under a Finance Lease, the asset is still entered as a capital item on the Hirer’s Balance Sheet.
Car finance leasing is normally only beneficial for VAT qualifying vehicles. |
