Equipment finance benefit
The latest Finance & Leasing Association (FLA) figures show that asset finance lending increased by 25% to £1.7 billion in May compared to the same time last year, with around 1,000 small businesses taking out equipment finance every day.
“It’s great news that more and more SME businesses are seeing the advantages of assent finance lending,” Fenestration Finance’s Mark Johnson said. “It’s making it more feasible for them to move forward with their business plans whether this is expanding their current businesses, purchasing more modern, efficient equipment or simply upgrading the facilities they have.”
However, research by the FLA as part of the Open University’s Quarterly Survey of Small Business in Britain, also shows that tax breaks designed to help small firms invest in new equipment are too complicated and are failing to boost spending.
The survey of 950 businesses asked whether the capital allowances rules were clear enough. Only 8% of SMEs thought they were easy to understand – 19% rated them acceptable, 31% thought they were complicated, and 42% didn’t know or left it to their accountants.
Under the capital allowances system, firms investing in new equipment pay less tax on their profits. The survey also revealed that for 80% of firms, capital allowances had no impact on their investment decisions, which suggests that the allowance is not acting as an incentive for growth. The risk for the economy is that small businesses do not have the latest equipment, which means they can compete for new business in within the markets.
For many small businesses particularly in the glazing and window industry, the answer is to lease equipment. Leasing companies then claim capital allowances and pass on the benefit through lower rental payments.
Mark Johnson of Fenestration Finance’s added: “While it’s been a very difficult time for the financial sector we are now seeing month on month growth. The team at Fenestration Finance’s always explain the tax benefits to our clients, that can be considerable amounts but are often over looked. I also feel this proves the UK SME market is defiant and will continue to expand.”
