Leasing your office furniture or fitout project can often work out better for business than outright purchase, particularly if your business is a Limited Liability Partnership (LLP) or Partnership. There are three key reasons for this.
Highly tax efficient
If you pay for the furniture and refurbishment of your office from your cashflow, only a limited percentage is allowable for tax purposes. Because of the ‘intangible’ elements, the Revenue only allows you to claim capital allowances against approximately 65% of the project. However, if you lease the works, the repayments are 100% allowable unlike any other form of finance such as a bank loan. As a revenue cost, for a profitable partnership or LLP paying top rate tax, leasing is the most tax efficient method of finance.
It enables a fairer allocation of cost among Partners
By choosing to lease, you spread the cost of a new office environment over three or five years and monthly payments are fixed for the duration of the lease. This ensures that all future partners not only share in the new office environment, but in the cost of it too. Correspondingly, retiring partners only pay for the new office until their retirement date rather than bearing the full cost of the project up-front.
Leasing gives more financial flexibility
Leasing allows you to preserve your existing bank credit lines without compromising future working capital. So if your partnership has plans for further development or will require investment in the short to medium term, then this option could be the right one for your business.