Equipment and Vehicles - My New Venture

Pros	Cons
There’s a low start-up cost compared to buying	As you don’t own the vehicle, it isn't considered an asset
You may be able to claim a high percentage or all of the VAT back	Driving too many miles may mean you have a penalty at the end of the period to pay
Servicing and maintenance will usually be up to the leasing company	If you miss payment it will affect your credit rating or offerings with other lease companies

Pros	Cons
You may have a chance to negotiate on the price	Depreciation is hefty and immediate with new cars
The vehicle is an asset that may be used to secure finance or pay off debts	Maintenance costs are all on you and will increase as the car gets older
There are no mileage restrictions that you need to consider
You could offset this against your tax bill if you are a limited company or have it as an allowable expense but your accountant can confirm

Pros	Cons
Ownership of the asset is yours unless you have used it as security for a loan	You might need to use an overdraft or loan for the purchase
You may be able to claim capital allowances on it	Servicing and maintenance of the equipment is your responsibility and unexpected repairs can be costly
Payment up front means less long term agreements which can be a burden	Depreciation could lead to value of your asset being less than you paid for it
The overall price of the equipment will be cheaper than spreading costs over time	You can’t take advantage of the tax benefits of rental
	It may be a large investment of cash at a time when you don’t have revenue flowing in

Pros	Cons
The cost of the equipment is spread over a period of time so you don’t need to use up big chunks of cash at the beginning	You can't claim capital allowances on the leased assets if the lease period is for less than five years (and in some cases, less than seven years)
Often the equipment will be better than you could afford to buy outright	It may end up being significantly more expensive than if you bought the equipment outright
You pay for the asset over the fixed period that you use it, which helps you budget for the future	You might be locked into agreements over a medium to long period which means you’ll have to continue paying even if your business has stopped earning
Monthly rental costs are generally fixed over the period so your cashflow is easier to forecast	Your business will need to be VAT registered to take out a lease agreement
A lease hire is often tax deductible	You don’t reap any of the benefits of owning an asset; such as financing or selling to pay off debt
The leasing company will take care of maintenance and breakdowns	The agreements with lease companies may be complicated and require administrative assistance
Upgrades or replacements may be available at a small additional cost compared to buying an upgrade outright
Long funding leases over 5-7 years may mean you can claim capital allowances on the cost of the equipment