When choosing to fund with an Operational Lease, you are only paying for the use of the asset. This usually reduces your monthly payments to those of Hire Purchase and Finance Lease. At the beginning of the agreement, you will usually pay an upfront rental fee and all the rentals include VAT. At the end of the agreement you simply hand the asset back to the finance company. With this finance product you cannot claim any capital allowances, but you can offset the rentals against taxable profit.

Benefits

• Lower monthly payments
• Lower up front cost
• Offset rental payments as a business expense
• Fixed term and fixed payments helps budgeting

Potential Risks

• You have no option to own the asset
• Not applicable for any capital allowances
• If you terminate the agreement early, you may have to pay an early termination fee which can be costly

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