IT leasing - 100% tax relief

[ljc]

Hi, what exactly does this mean?

Nice simple example would clarify this best for me. This is how I'm being told it works by a leasing company, however, I've read conflicting things now.

Lease Value: £1,000
Pre-Tax Profits: £50,000

Example 1.
Taxable Profits = £49,000
Tax Bill (10% example) = £4,900

Example 2.
Taxable Profits = £50,000
Tax Bill - Lease cost = £5,000 - £1,000
Tax Bill = £4,000

So in words.... does the cost of the lease come off of your tax bill or does it just reduce your pre tax profits?

Thanks

[Clare@InTouch]

It would be an expense and reduce your profit, thereby reducing your tax. It's not something that can actually reduce the CT value itself.

Do you have the exact details the lease company have given you? They may be talking about first year or annual investment allowances....?

[Seki]

Operating Lease

Hello,

I think they are talking about operating lease. The expense of operating lease is deducted from your operating expenses, therefore reducing your tax bill. Also, if you lease, the tax that you pay on equipment is returned to you during the lifetime of the lease as opposed to using 18% capital allowance.

I hope this helps and makes sense.

Good luck!

Hi, what exactly does this mean?

Nice simple example would clarify this best for me. This is how I'm being told it works by a leasing company, however, I've read conflicting things now.

Lease Value: £1,000
Pre-Tax Profits: £50,000

Example 1.
Taxable Profits = £49,000
Tax Bill (10% example) = £4,900

Example 2.
Taxable Profits = £50,000
Tax Bill - Lease cost = £5,000 - £1,000
Tax Bill = £4,000

So in words.... does the cost of the lease come off of your tax bill or does it just reduce your pre tax profits?

Thanks