|
|
Project Finance
Example - (Cash
versus lease)
The following is an example
of a typical £225,000 project and compares the difference between straight
forward cash or bank purchase, against leasing the works and gaining the
additional tax benefits.
Option 1 - Cash or Bank
Facilities
|
Fit out Costs |
|
|
£225,000 |
|
|
|
|
|
|
%
allowable for capital allowances |
25% |
|
|
|
|
|
|
|
£56250 |
25% |
£14,062.50 |
|
|
|
£42188 |
25% |
£1 |
|
|
|
£31641 |
25% |
£7,910.16 |
|
|
|
£23730 |
25% |
£5,932.62 |
|
|
|
£17798 |
25% |
£4,449.46 |
|
|
|
|
|
|
|
|
Amount on which tax relief is available |
£42,901.61 |
|
|
|
|
|
|
|
|
Total
profits over 5 years |
£1,000,000 |
Assumed |
|
|
|
|
|
|
| Taxable Amount |
|
£957,098.39 |
|
|
| Tax at 30% notional |
£287,129.52 |
|
|
|
|
|
|
|
| Total payable, inc tax bill |
|
£512,129.52 |
|
|
Option 2 - Leasing
|
60 months @ |
£4,758.75 per month |
£285,525.00 |
|
|
Amount on which tax relief is available |
£285,525.00 |
|
|
|
|
|
|
|
Fit out costs including lease interest |
|
£285,525 |
|
|
|
|
|
|
Total profits over 5 years |
|
|
£1,000,000 |
Assumed |
|
Taxable amount |
|
|
|
£714,475 |
|
|
|
|
|
|
Tax at 30% notional |
|
|
214,342.50 |
|
|
|
|
|
|
|
Total payable. Cost of leasing plus tax bill |
£499,867.50 |
|
|
|
|
|
|
|
Minus opportunity value of money at say 4% p.a. |
£45,000 |
|
|
|
|
|
|
|
Total amount payable |
£454,867.50 |
|
|
|
|
|
|
|
Leasing works out cheaper by: |
£57,262,02 |
|
Genus Interiors: financing the future of working
environments.
|
genus
