finance lease or hp

[mjb6964]

Hi. Hopefully somebody can help.
I have forecast by the end of next week I may have a tax liability (after PA) on earnings of £25,000.
Hence I don't want to be paying out £5k plus NI Plus on account next Jan 31st.

So I need a new work van.

I understand if I HP a vehicle at £25,000 I can offset this full amount in year one. Great but monthly payments very high.

If I finance lease (with a ballon) to bring the payments down , can I still offset the total cost in year one similar to HP?

Or is HP the only way to go.

Thanks in advance if you've taken the time to help

 

[Mark T Jones]

Why not HP with balloon?

 

[mjb6964]

Why not HP with balloon?

didn't realise they did hp with balloon? worth checking though. so i assume finance lease is not fully off settable years one? thanks

 

[Mark T Jones]

didn't realise they did hp with balloon? worth checking though. so i assume finance lease is not fully off settable years one? thanks

No, you won't get AIA on finance lease

ask @Gordon - Commercial Finance

 

[mjb6964]

No, you won't get AIA on finance lease

ask @Gordon - Commercial Finance

that answers that thanks.....

 

[Gordon - Commercial Finance]

didn't realise they did hp with balloon?

Yes HP with balloon, the best kept secret in the motor trade. All the good bits of PCP, without being terrible for customers....like PCP!

HP with a balloon is a really good way of keeping your payments down, and a reputable broker working in your interest would structure your finance in such a way that you balloon is considerably less than what your expected residual value will be. That way you're protected against anything unforseen forcing you into a negative equity position, you don't need to worry about mileage, and when your balloon comes around if you want to keep the vehicle, you can generally spread the balloon over a couple of years too.

The main thing to consider in comparing HP with finance lease is the VAT. On HP you need to pay the full VAT up front, and if you're VAT registered of course you can get that back. You can even get a 3 month VAT deferral often so that you're never out of pocket.
On a finance lease, there is VAT on each monthly rental, so you pay 20% more per month, but its like spreading the VAT over the full term rather than paying it all up front essentially. Useful for businesses who are not VAT registered....