Equipment finance, usually known as asset finance or a lease, is often frowned upon by cash rich businesses and only offered to customers of equipment sellers to who raise a price objection.
Managing your business finances is totally different to how you manage your personal finance. Any decent accountant will try and save you having to pay unnecessary tax on your profits. This is where equipment finance can help, not only businesses who don’t have the cash to buy outright, but also the highly profitable businesses that pay a lot of tax.
There are a number of ways a business can borrow money to acquire equipment, with leasing being the most common option being offered by equipment sellers. Leasing is a highly tax efficient way for a business to acquire equipment, as the equipment is bought buy the leasing company and then rented to the end user. This means the monthly payments are an expenditure, which is 100% deductible from any taxable profits. Below is a simple illustration of how this is works based on a business that pays at the standard corporation tax rate:
Cost of equipment: £20,000 + VAT
Monthly repayments over 3 years: £640 + VAT
Total repayments over 3 Years: £23,040 + VAT
Tax Benefit over 3 years (based on corporation tax of 19%): £4,377
Total payback over 3 years: (£23,040 - £4,377): £18,663 + VAT
Effectively saving you £1,337 + VAT off the cash price.
Leasing has many other advantages with it being a rental as it has no impact on your existing funding lines, the repayments are fixed through the term, so no sudden increases, and it allows you use the equipment now instead of having to save for it and miss out on any potential income. The cash you don’t use to buy the equipment can then be used to market your new services, which will only increase your profitability.
Of course don’t take our word for it, before buying the next piece of equipment for your business ask your accountant if a lease is the best, most tax efficient way to fund it.
Figures released by the Finance & Leasing Association (FLA) show that asset finance new business overall grew in July by 8% compared with the same month last year.
They also report that new business for deals of up to £20m increased by 7% over the same period, and total FLA asset finance was £3.075bn. The plant and machinery finance, and commercial vehicle finance sectors reported new business up in July by 12% and 13% respectively, compared with the same month in 2018, while the car finance sector saw growth of 6%.
Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The asset finance market made a solid start to the third quarter of 2019. Despite subdued levels of business investment, the industry has seen new business grow by 7% in the twelve months to July.”
The figures all indicate that more and more businesses are focusing on leasing as a more efficient way to acquire capital equipment. Asset finance provides lots of choice, whether you’re looking to unlock cash from items you own, or require new equipment for your business, whatever assets your organisation needs to invest in, Admiral Leasing & Loans has the expertise and the experience to help you.
We are delighted to have secured additional funding and expansion capital facility from British Business Investments.
British Business Investments Limited, the commercial arm of the British Business Bank, is investing £12m over the next five years into Admiral Leasing and Loans.
The investment is expected to double Admiral’s leasing and commercial loan capacity, allowing it to support more businesses accessing asset finance as part of their growth plans over the next five years.
The £12m contribution, British Business Investments’ fourth deployment of its expansion capital variant into the asset finance sector, comes through the Structured Capital Solutions variant of its Investment Programme. The programme helps widen the choice of funding smaller UK businesses can find on the market, and has now committed £700m to providers of smaller business finance.
Michael Hughes, Managing Director, Admiral Leasing & Loans, said: “We are delighted to have secured this additional funding and expansion capital facility from British Business Investments. This combined facility will allow us to double the amount of funding we can make available to our varied SME customer base to support them with their future equipment and working capital requirements.
This innovative product from British Business Investments is a great example of government supporting lending to UK SMEs and will help us continue our rapid growth.”
Asset based ﬁnance can help many growing companies by providing a funding solution that can increase at the same rate as the cash ﬂow needs of the business. It is also one of the best ways for a company to ﬁnance itself during a period of change, such as expansion.
The latest figures released by the Finance & Leasing Association (FLA) show that asset finance new business grew by 5% in 2017, the seventh consecutive year of growth. According to the FLA, the asset finance industry reported a record level of new business of almost £32 billion in 2017, despite challenging economic conditions.
Size doesn’t matter
Asset-based ﬁnance is a viable option for all businesses, no matter what their size. There are many benefits that cannot be found in other forms of financing. Leasing offers many advantages;
Frees up capital
Fixed payments make budgeting and cash flow simple to manage
Protects your existing credit lines
At Admiral Leasing & Loans, we tailor payment plans to the needs of your business as well as seasonal variations. Whether you are buying or selling business equipment, leasing makes investment easy and quick for you and your customers.
With this year's self-assessment tax return date looming, it has recently been announced that from January 13th, 2018, HMRC will decline all personal credit card payments. The ban is a response to new EU rules that make it illegal for all businesses, including HM Revenue and Customs, to pass on the 1.5 per cent fees that banks charge to process each credit card payment. As a result, instead of covering the cost of the charges itself, HMRC has banned the use of personal credit cards when making a payment.
The ban comes at an already difficult economic time for many businesses trying to manage cashflow, and the timing is likely to cause problems for some of the eleven million people aiming to complete their annual tax return by the January 31 deadline.
HMRC does not hesitate in issuing penalties to companies that do not pay their tax liabilities on time. Many businesses have cashflow that can go up and down over time, however, unforeseen circumstances, or a better use for that money can cause problems when it comes to paying.
With repayment periods of just 3 months, our short-term loan facilities have been designed to help businesses manage this expense. Allowing businesses to take control of their cash flow and spread the cost of their tax liability into more manageable monthly payments.
Why opt for an Admiral Loan?
Easy to arrange facility
Repayment periods from 3 months to 5 years
Fixed monthly repayments
Decisions in as little as 24 hours
Protects your working capital
E-documentation option for fast document completion
Protects existing bank facilities
HMRC receive payment on time, resulting in no penalties!
Contact us today and we will tailor the loan to suit your circumstances moving quickly to avoid any late payment penalties from HMRC.
Wouldn’t it be great if you could find an easier way to achieve this year’s sales figures? Admiral Leasing and Loans may be able to help.
As an equipment supplier do you offer the right finance option to your customers? Whilst offering a finance option is proven to reduce cost objections, increasing your margins and efficiency, you also need to make sure you are working with the right finance partner.
Here at Admiral Leasing and Loans, it’s important for us to get to know your company, products and sales team. We offer training and take part in sales meetings where possible, to make sure that you have all the tools you need to help achieve your 2018 sales objectives. We’ll support you throughout the year putting sales targets and incentives in place.
To find out how we could make a positive difference to your year contact us now.
After 30 years of trading Admiral Leasing have moved to larger premises situated within a converted mill on the outskirts of Oldham. Directors Michael Hughes and James Frost commented that ‘the time is right for Admiral to look to the future. The economic climate is improving and we need to be ready to react and have plans to increase staffing levels over the next few months so that we can increase business and offer the best service possible for our brokers and direct customers old and new.
Moving after 30 years gave us a good opportunity to have a good clear out but we were very quickly up and running again and open for business. So if you are looking for equipment finance or would like to know about the new job opportunities available, why not make contact...
Admiral Leasing staff had a few days of feeling like 'Mary Berry' when all colleagues supported the Worlds Biggest Coffee Morning on Friday 25th September 2015 in support of Macmillan Cancer Support. There was a huge effort from the staff of Admiral, baking and producing cakes and selling them to the staff of the various businesses in the building.
The event was hugely supported by everyone involved in baking and more importantly buying. Admiral raised a great £212.00 in support of this fabulous cause.
A heart felt thank you from all at Admiral Leasing to all who came and bought our cakes, the event was a great success.
Susette has over the years built a very successful beauty business from a converted garage in her house. She has always invested in technology, but the 3D Lipomed was just out of reach financially. So with the help of Admiral Leasing we managed to create an affordable solution.
She now has the capability of reducing fat, without surgery, along with treating skin tightening and cellulite. Susette said, ‘I am so excited, this is exactly what my clients have been asking for and it is going to be such a boost to my business. I couldn’t have done it without the help of Admiral.‘
Admiral’s Sales Manager, Carol Bolton, is very pleased to announce the birth of her daughter Florence, who was born on the 17th February. All the team at Admiral wish her well and hope she settles into motherhood….but we are also looking forward to her returning to Admiral soon!