Finance for Manufacturing

Asset Finance via Hire Purchase

For certain types of asset financing requirements Hire Purchase offers a straightforward way to spread the costs. With this type of asset finance plan you pay a fixed rate of interest and benefit from agreed monthly payments, making budgeting simple and easy.

You choose the amount of deposit you wish to pay, typically between 5%-50% of the assets price. The remainder of the balance, together with the interest, is repaid over an agreed period (12-60 months).

If you are looking to finance assets like capital equipment or plant and machinery then the benefits of Hire Purchase would be:

• Low deposit – not a drain on working capital
• Fixed monthly payment – makes budgeting simple
• Flexibility – doesn’t compromise your other lines of credit
• Assets – you gain ownership of the asset
• Tax benefits – tax allowances for business users
• VAT free – no VAT on payments

The Annual Investment Allowance enables companies or individuals to offset new expenditure on qualifying plant and machinery assets against profits to reduce the amounts of Corporation Tax or Income Tax payable. Since it came into effect on 1 April 2008, the amount of the Annual Investment Allowance has been £100,000 per annum, however with effect from the 1 April 2012 for Corporation Tax and 6 April 2012 for Income Tax, the amount of the Annual Investment Allowance has been reduced to £25,000.

If businesses are looking to invest in qualifying plant and machinery they should seek advice from their accountants prior to doing so to ensure that they are eligible and meet the qualification criteria. If this is the case, then NGI Finance can help them to find the right funding option for the purchase of the equipment and get it in place well before the deadline.