There are many things to consider when financing your new coffee machine. Whilst a ‘cash’ purchase will always be cheapest since you won’t have any interest or fees to pay, it may not always be the best option.
Through our partners, Shire Leasing PLC, Bridge Coffee offers our clients a range of purchase and finance options.
By choosing to lease rather than purchase, your business will enjoy some fantastic benefits:
- Keep cash flow within the business.
- Get the Coffee Machine you want when you need it.
- Get a better-specified, more expensive machine.
- Structure your lease payments to suit your budgetary needs and allowances.
- Pay monthly or quarterly over a chosen period of time rather than handing over one large lump sum.
- Keep up with the latest technology & solutions by upgrading the equipment at any time throughout the lease period.
- Protect your existing credit lines by using leasing as an alternative funding facility.
Leasing is not expensive!
Many people believe leasing is an expensive option. This simply is not the case. This is why even large ‘cash rich’ companies choose to lease. Unlike many high street bank facilities or overdrafts that are subject to changes in market conditions, a lease facility with its protected payment and fixed interest rates allows for effective future budgeting.
100% allowable against pre-tax profits!
Because finance lease rentals are 100% allowable against pre-tax profits, the total cost of your purchase, capital and interest can be offset during the lease period, with your payments deducted as a trading expense. A cash purchase will allow tax relief only on the capital allowances on the equipment. This is currently 18% of the cost in the first year and 18% in subsequent years based on a reducing balance each year.
Take a look at this example
Based on a 2 bean-2-cup coffee machine with a value of £4500.00 ex vat.
Cash purchase and monthly lease payments over 3 years.
CASH PURCHASE |
LEASE RENTAL |
||||
| Capital Allowance | Tax Relief | Capital Allowance | Tax Relief | ||
| Year 1 | 18% of £4500.00= £810.00 | Less 19% =£153.90 | 12 rentals of £169.61= £2035.32 | Less 19% =£386.71 | |
| Year 2 | 18% of £3690= £664.20 | Less 19% =£126.20 | 12 rentals of £169.61= £2035.32 | Less 19% =£386.71 | |
| Year 3 | 18% of £3025.80= £554.64 | Less 19% =£103.48 | 12 rentals of £169.61= £2035.32 | Less 19% =£386.71 | |
POTENTIAL TOTAL TAX RELIEF |
£383.58 |
POTENTIAL TOTAL TAX RELIEF |
£1160.13 | ||
These figures are for illustration only.
Tax Benefits are dependent upon your individual circumstances.
It is your responsibility to seek the appropriate professional advice.
