How recent tax changes will affect your business & how to choose the right finance partner.

As a small business owner, recent changes involving taxation on leases came as substantial news to me - simply because they'll affect the way I asses my business asset funding decisions in the future. The most significant of these adjustments, set to eliminate the time apportionment of capital allowances for leasing companies, signifies a decrease in the cost of most of my lease agreements entered into after April 2006. This is because leasing companies can now claim a whole year's worth of allowances, regardless of when in the year I entered the lease. The change applies to all finance leases up to five years and many up to seven years, making each deal cheaper in real terms. And what's more, tax relief on rentals doesn't change, so there's a net gain for my business.

Other benefits of the arrangement include a possible 100% financing deal, a rental calculated on the purchase cost net of VAT, and handling of the VAT reclaim on purchases. With benefits like these, leasing appears to be an even better option than before - which is why I decided to extend my vehicle fleet to keep pace with business growth. Leasing vehicles has always had a VAT advantage; but with cheaper rentals as well, the benefits are now even greater.

There are a number of outstanding financial institutions, who can help business owners fund a fixed asset investment and thereby facilitate a company's growth to its full potential. With the right type of support, it’s possible to increase working capital by releasing cash tied up in stock, sales ledger, and business assets - such as vehicles or equipment - and hence drive business growth.

When it comes to sourcing the right type of asset-based lending for your business, you have the option of going through a supplier, an independent broker, or a finance house, which is likely to be part of a wider banking organisation. In choosing a finance partner, it's always worthwhile considering the level of expertise they have in your particular market place, whether or not they operate by the code of the Finance Leasing Association, and how beneficial it could be to keep the financing separate from the supply of the equipment. While suppliers may appear to offer better finance rates, using an independent financier ensures that you'll maintain negotiating power and a sense of flexibility, thus avoiding any 'hidden' terms.

Recognising the unique requirements and individuality of each business, financial institutions can personalise funding packages to suit a company's needs. Such tailored solutions can help business owners save money, maximise tax benefits, and improve profit margins, and what's more, secure those critical business assets such as new print machinery, IT equipment, and in my case, vehicles that ensure your business can continue to grow.

The scheme is methodically structured to make the most of available tax allowances, and to improve your return on investment, and with the right finance partner, you'll undoubtedly utilize your resources to their full potential. Asset financing has played a phenomenal role in helping my company deliver optimal service, and I can assure any other business owner that it would certainly be worthwhile exploring how it could help your business with your future purchasing plans.

About the author:
Andrew Regan began his career in Advertising, Film and Television and worked for 20 years at the HTV Studios.