Asset finance is usually available in periods of 6 months up to a maximum of 7 years for amounts of £5,000 up to £5,000,000. Finance is available on the vast majority of business assets including IT equipment (both hardware and software), vehicles, engineering machinery, printing equipment and warehouse equipment. There are three main types of funding available with the most commonly known being Hire Purchase. This is available on fixed or variable rates and payments can be structured to suit cash flow. Clients will own the asset at the end of the finance period and are able to claim capital allowances, reclaim VAT and offset interest payments and taxable allowances. A Finance Lease gives clients immediate use of equipment for a small capital outlay whereby the the Finance company takes legal ownership of equipment and leases it back to the client, allowing clients to preserve their capital resources. The Finance House claims the benefits of any capital allowances and reflects this in the rentals charged. Payments are subject to VAT, which is reclaimable on a monthly basis.Rentals paid within tax year can be offset against taxable profits. An Operating Lease is a Finance Lease with a built in residual value where the Finance company takes the residual value risk. Built in residual reduces amount to be financed which in turn reduces monthly rentals. This can be off balance sheet.
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