Big Incentive For Consumers And Small Business To Use Leasing

Saturday, 13. September 2008

Over the years I have often found myself locking horns with accountants over the benefits of leasing. Most accountants fall into one of two categories, they either ‘get it’ totally or are totally clueless. Of course all of my accountant readers ‘get it’ totally. It was highlighted last week once again when I couldn’t get a potential client’s accountant to appreciate that by taking a lease his client would save around £6,000 with a reduced risk and several other benefits including reduced cash flow but he was so focused on the tax benefits of purchase that he couldn’t understand the bigger picture. You see if you buy a car that has terrible depreciation you can still offset the whole of the depreciation against profit – assuming you are making any, but that’s another story! With manufacturers chucking huge amounts of bonus into cars that are being leased you can currently save a fortune as well as achieve much better cash flow but some accountants still refuse to believe that manufacturers give away as much as I say they do, up to a total of 45% of retail price if you include the dealer discount. But their point is that as the car becomes more expensive you can offset less of the lease cost against profit, a situation that doesn’t apply if you either purchase outright or use a purchase scheme such as HP, you simply offset all the depreciation, irrespective of the cost, albeit you may have to wait till you dispose of the car till you offset the bulk of the depreciation as a balance allowance. But that is all about to change as of April next year. If what I am reading is true the writing down rates for new cars registered is down from 25% to bands of 20% and 10% based on emissions but more importantly there will be no balance allowance when the car is disposed of so the car could still be attracting allowances several years after the car is sold. Leasing will make it all so much simpler and certainly save you money. By Graham Hill