Capital Equipment Leasing
Capital equipment is a phrase used in the UK leasing sector to define items of equipment that are used to make, market, keep or transport products.
At what value do UK companies capitalise equipment?
The value at which you capitalise equipment will depend on your company policy. Some UK companies we speak to will capitalise any equipment that has a useful life over one year where the value is over £500.00. Larger companies may look to capitalise equipment for items over £1,000.00, £3,000.00 or £5,000.00.
WestWon will mostly look to capitalise assets that we purchase over £1,000.00 in value.
How long does equipment need to last to capitalise it?
Again, this depends on your company policy. We would look to capitalise any equipment that has a useful life over one year, assuming it meets the value criteria as well.
How does capital equipment and leasing work?
Many UK companies will look to lease items of capital equipment as they look to spread the cost – and benefit derived from the equipment – over the equipment life. It preserves cash and will allow you to budget for the equipment easier as in effect, you pay for it as you use it.
Saying that, some companies will also look to capitalise equipment on their balance sheet and pay cash for it.
Leasing capital equipment is an easy process. You choose the equipment and supplier and confirm prices with them. WestWon – being a UK capital equipment leasing company – will organise a lease for you. You can decide on the term, normally between one and five years. Our recommendation is to have lease term in years that is roughly the same as the assets useful life.
The only real difference then is that we will pay your chosen supplier.
What about items of capital equipment with a useful life over five years?
Quite a lot of capital equipment we finance will have a useful life in excess of five years, waste equipment, scientific equipment or vehicles for example. For this equipment, we can build in a residual value. This is an amount of money we believe the asset will be worth in five years for example. The monthly rental figures will then be lower as we take off this residual value off the lease price.
Get in Touch!
If you are a business looking for new equipment but want to save cash and spread the cost, please give us a call here at WestWon on 01494 611 456 or send an email to info@weston.co.uk . Look forward to hearing from you!
