What is equipment leasing?

Lease contracts are clear, concise and can be issued for digital signature, saving on printing and postage

Leasing is quite simply the process of acquiring equipment via third-party finance and paying for it in manageable monthly amounts over a pre-agreed term. It’s like a loan, only the loan is secured by the assets you have acquired, which allows for a lower rate of interest.

The Lease Group work with a number of suppliers and third-party lenders, enabling you to get financing for the equipment you need today, without paying large sums of money upfront.

By paying for the equipment monthly you will be preserving your hard-earned working capital and not tying money up in ever-depreciating assets.

Most importantly, leasing allows you to invest your money in more profitable activities and will enable your business to grow further.

What are the benefits of leasing?

30–40% of a lease sale can be made up of professional service charges, further saving on upfront costs

Putting your hard-earned money to better use is the number one reason why
businesses lease office equipment. Listed below are some of the other reasons why
leasing might be for you.

  • It is cheaper than buying outright (once tax relief is accounted for)
  • Afford the best quality – no compromises
  • Flexible tenures from 12–84 months
  • VAT is charged on the smaller payments and not the large fee at the start
  • Tax allowable — rentals are an operating expense and are 100% tax-deductible
  • Payments are fixed for the term
  • One rental can include all equipment and ancillary costs i.e. consultancy, installation, training and maintenance
  • Keep your credit lines intact — leasing does not affect any of your existing credit lines
  • You are free to upgrade, make additions, or settle the finance agreement at any point
  • Flexible options at the end of the lease – including indefinite ownership

What is the process for leasing?

Are you a charity? We can finance the lease through your limited entity if so – check that you have one!

The process is quite simple. First, tell Sevadis your requirements and inform them that you wish to be quoted a lease option.

Sevadis, in partnership with the Lease Group, will be able to offer you a range of payment options, including monthly, quarterly, and tenures from 1–7 years.

Confirm the tenure that best suits your budget and, soon after, your finance agreement will arrive via email.

Upon completion of the paperwork, Sevadis will deliver the equipment and then your instalments will begin (paid by Direct Debit).

Many business customers are delighted to find that professional services can also be included in the lease. So, if your upgrade requires installation, setup, training or maintenance fees, these can be broken down into monthly payments too!

Close

Tax relief example

Company A is looking to purchase a new EVCP system. The supplier has offered them
two options, either to buy the equipment outright or to utilise a lease option.

Assumptions:

  • Equipment Price: £7,374
  • Lease Period: 3 Years
  • Frequency: Monthly
  • Company’s Tax Rate: 30%
Cash Purchase:
Tax relief is only available on the capital allowances on the equipment.

Year 1 – 25% of £7,374 = £1,843 – Less 30% = £553.00

Year 2 – 25% of £5,531 = £1,383 – Less 30% = £415.00

Year 3 – 25% of £4,148 = £1,037 – Less 30% = £311.00

Total tax relief: £1,279.00
Lease Purchase:
Tax relief is available on all rentals, in this case at a rate of 30%.

Year 1 – 12 rentals of £252.00 – Less 30% = £908.00

Year 2 – 12 rentals of £252.00 – Less 30% = £908.00

Year 3 – 12 rentals of £252.00 – Less 30% = £908.00

Total tax relief: £2,724.00

By choosing to Lease, Company A would gain over £1,400 more in tax relief when
compared with a cash purchase.

As long as your equipment totals £1,000 (ex VAT) or more, then you qualify for leasing.

Prior to paperwork being sent, we will perform a quick credit check on your business to ensure we can secure funding for the amount required.

As will be itemised in our Lender T&Cs, your equipment will need to be insured; otherwise the Lender will add insurance for you. This gives you and the Lender added security in case any of the equipment gets lost, damaged or stolen during the term.

Do not worry though, the equipment is usually already covered in your building and contents insurance – this is the case 97% of the time.

Due to the Consumer Credit Act, it can be easier and quicker to arrange finance if your company is registered as one of the following:

  • Limited Company
  • LLP
  • PLC
  • LEA School
  • Any organisation in the public sector
  • Partnerships of 4 or more partners

Talk to our team about leasing options today