Products | Finance Lease
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 goods acting as agent of the Lessor ( the Finance Company ). The lessee normally benefits from a rebate of rentals ( based on sale proceeds ).
If the lessee wishes to continue to use the equipment after the end of thre Primary Period, the option exists to extend the lease into Secondary Period. Annual Secondary Period Rentals ( SPR ) are paid each year the equipment is retained by the lessee. The SPR is a small percentage of the original equipment 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.
The machine must be comprehensively insured by the lessee.
Benefits :
 | Size and timing of rentals agreed in advance to support confident budgeting. |
| Rentals 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 sale proceeds on disposal following the end of the Primary Period, so repays careful use. |
| Hire Purchase |
| Finance Lease |
| Operating Lease |
| Contract Hire |
| Cashflow Matched Finance |
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