Tax & Accounting Benefits
Tax and accounting benefits
With 100% allowances, you can potentially save between 20-40% of the cost of the lease, depending on the rate of tax you pay.
There are tax and accounting benefits to companies which chose to lease rather than buy. Leasing costs are classified as an expense rather than a debt or outstanding liability which means that which means that which means that your options for debt financing or credit remain more flexible.
This status as a rental as opposed to a liability on your balance sheet is also something the banks like to see, says Jeremy Standing, sales director at lease finance firm Key Finance "The finance director or the bank will have covenants about what you can spend. They know how they want the financial accounts to look at the end of the year, which is why an operating lease can be attractive."
In terms of tax, one clear advantage is that a lease is 100% tax allowable, which means that your regular payments to the leasing firm are completely written off your taxable profit for the year. This could potentially save between 20-40% of the cost of the lease, depending on the rate of tax you pay.
View our "True Cost" PDF and see how you could save.