The Benefits of Leasing your New CCTV System
In the UK leasing for capital equipment grows and growsand Latest figures suggest that at around 50% of current CCTV security installations are financed through this method. We offer all our clients the opportunity to purchase a system out right or purchase via an affordable lease. Today nearly all companies lease some of their equipment, and is now recognized as the preferred option for asset finance. This is due to the advantages it gives businesses from tax efficiency, effective budgeting and improvements to cash flow.
Tax Deductible All of the payments made under a lease agreement are treated as an operating cost and therefore are totally tax deductible. Fixed Payments All of our leases are on a fixed interest basis and remain constant irrespective of what happens to bank base rates, which lead to accurate budgeting. No major up front costs There is no need for a major outlay to acquire the new equipment. A small outlay by direct debit is all that is required. Alternative funding source In using leasing to acquire their Security systems, our customers protect their other lines of credit, such as loans and overdraft facilities and conserve any available capital. Leasing Vs Outright Purchase or Bank Loan Leasing your CCTV system is highly tax advantageous as every payment receives 100% tax relief. Example figures:- Outright purchase: £5,000 Lease: £26.76 + VAT per week (Paid by monthly direct debits of £115.98) 60 payments (5 years) £6,958.56 Maximum tax relief 40% £2,783.42 Cost after tax relief £4,175.14 A SAVING OF £824.86 AGAINST THE CASH PURCHASE PRICE As you can see by the example above the lease can have considerable advantages so long as you are in profit. Amount of tax relief depends on your tax band (22% / 40%). 1. The tax relief can actually reduce your overall cost
2. You don’t have to endanger your liquid cash flow purchasing new equipment when you can invest in stock and increase your profits. What happens at the End of the Lease During the lease period (normally 3-5 years) you are renting the system and for that reason you are gaining your 100% tax relief. At the end of the period therefore the equipment is not your property, which means in theory you should return it to the suppliers. However in practice no one does this. We will sell on the ownership of the system for one further monthly payment, which of course is still 100% tax deductible. Which way Should you go, Purchase or Lease Unless you have available cash in the budget with nothing else to spend it on most clients will prefer the lease option as they can have the system they desire with minimum upfront costs and low monthly payments.