It takes hard work and dedication to create a prosperous catering business. Whether in regard to a new set-up or an established brand, everyone must pay attention to and keep a handle on the finances to ensure that every decision is beneficial to the business.
One of the ways to keep costs under control is by leasing your appliances and equipment instead of buying them outright. Here we discuss the benefits of leasing and how it can help your catering business succeed.
What is commercial leasing?
Leasing is a fantastic way to spread the cost of buying essential equipment. It also offers flexibility that may suit your business needs better than buying outright. Lease to Buy agreements are becoming increasingly popular with catering businesses of all sizes.
At its simplest, leasing allows you to pay for an item over an agreed time, usually two to five years. At the end of the lease, you make a final payment, buying the equipment outright for a pre-agreed price.
What catering equipment can I lease?
New or established catering businesses can lease any equipment as long as the total amount is greater than £1000 exc. VAT, from ovens and fridges to dishwashers and glass washers.
Here is a list of the most leased catering equipment.
⦁ Commercial range ovens and cookers
⦁ Commercial fryers and griddles
⦁ Charbroilers, rotisseries and salamanders grill
⦁ Ventilation hoods and extraction
⦁ Walk-in coolers and freezers
⦁ Refrigerators and freezers
⦁ Ice machines
⦁ Commercial dishwashers and glass washers
Benefits of leasing
There are many benefits to leasing catering equipment, including:
- Spreading the cost: Leasing allows you to spread the cost of buying equipment over an agreed period. Cost spreading can make budgeting for and managing your cash flow more manageable.
- Upgrade equipment: A leasing option allows businesses to invest in and benefit from more advanced catering equipment models that may otherwise be completely out of the budget range when buying as an outright purchase with one upfront cost.
- Tax benefits: In some cases, leasing can offer tax advantages over buying outright. Tax advantages are not to be sniffed at - this is something you should discuss with your accountant before making a decision.
Other ways to spread the cost of buying catering equipment and commercial refrigeration
If leasing isn't suitable for your business, there are other ways to spread the cost of buying catering equipment, such as:
- Buy now Pay later options such as iwocaPay allows you to spread the cost of your purchase over three months.
- 0% interest free credit options from selected brands.
Carbon Trust Loans For Restaurant Cooking Equipment
It's possible to get interested free loan if you are a small and medium-sized enterprise or SME leasing energy-efficient equipment. The UK government's Carbon Trust offers this type of leasing for specific equipment, including restaurant cooking appliances.
Applying for a benefit loan from the Carbon Trust is straightforward and can be done online. You'll need to provide all the information about your catering business and the equipment you're looking to lease.
If you're considering leasing catering equipment for your business, the Carbon Trust loan could be a good option. Click here for more information regarding energy efficiency financing from the Carbon Trust.
ECA Scheme and Tax Relief for Businesses
If equipment is on the ETL (energy technology list), businesses can claim 100% tax relief on the leasing costs. The Department created the energy technology list for Business, Innovation and Skills (BIS), including catering equipment that meets identified energy efficiency criteria.
The government also offers an Enhanced Capital Allowance (ECA) scheme, which provides tax relief for businesses leasing energy-efficient equipment. The Enhanced Capital Allowance (ECA) assistance scheme was introduced in 2001 and has been extended several times.
*Please Note: the ECA scheme concluded in 2020 and has now been replaced by the AIA scheme.
Catering equipment that qualifies for the ECA scheme includes:
- Dishwashers
- Glasswashers
- Refrigerators
- Freezers
- Ovens
- Grills
The above is a guideline and not an exclusive list.
You can claim 100% first-year tax relief with further benefits in additional years if you lease catering equipment on the ETL.
Leasing catering equipment can offer significant benefits for your business. It can help you spread the cost of essential purchases and may sometimes provide tax advantages. So far, from an uncertain economy being a reason not to invest in a catering business, it could be an intelligent reason to get ahead.
Talk to a member of our team today to discuss leasing options.