A finance lease allows you to use an asset without the large upfront cost of buying it outright. Instead, you spread the cost over a fixed term, preserving your working capital and smoothing cashflow. This means you can invest your money into other areas of your business—such as stock, staff, or marketing—while still having immediate use of the equipment you need.
A finance lease allows you to use an asset without the large upfront cost of buying it outright. Instead, you spread the cost over a fixed term, preserving your working capital and smoothing cashflow. This means you can invest your money into other areas of your business—such as stock, staff, or marketing—while still having immediate use of the equipment you need.
From an accounting perspective, a finance lease typically keeps the asset and liability on your balance sheet. Depreciation and interest are charged to your profit and loss account, and you claim capital allowances on the asset, potentially reducing your tax bill. At the end of the agreement, you can often continue leasing at a nominal cost or sell the asset on behalf of the funder, sharing in any sale proceeds. In most cases you can reclaim VAT charged on the rentals.
In short, finance leasing combines predictable monthly payments with potential tax advantages, all while giving you full operational control of the asset. It’s particularly attractive if you want to avoid tying up capital in ownership yet still benefit from long-term use.
