UK Coaching: Creating a “Sense of Place”

“We have downsized from 12,000 to 5,000 square feet, but as all the space has been used to the maximum, it works perfectly and almost feels like we have more space.”

With office-based working hanging by a thread for many businesses, why would an organisation invest time and money into brand new offices?

For UK Coaching, the answer was simple: to support and inspire their clients and staff.

UK Coaching’s problem

Our environment has a big impact on the way we feel and behave. When we feel at ease, safe, and energised, we are better thinkers, better communicators, and more connected to the world and the people around us.

UK Coaching is the UK’s leading charitable organisation for sports and physical activity coaches and has been running for over 30 years and employs more than 80 people. They represent, support and inspire coaches to bring great coaching to the lives of millions, building healthier and happier communities in the process.

Although based in Leeds, the organisation works with coaches all over the UK who are improving a person’s experience of sport and physical activity by providing specialised support and guidance aligned to their individual needs and aspirations.

So, when we consider that the team at UK Coaching are responsible for inspiring and nurturing people so that they can inspire others in their communities, surely their working environment should support them in their mission?

Unfortunately, their workplace was anything but inspiring.

“In our old offices, which were old fashioned and gloomy, we were three separate companies operating in three separate areas. This made collaboration difficult. We wanted to be one team so that we could bring all our services for the coach together.”

Neil Ashton, COO UK Coaching

UK Coaching was also facing the challenge of bringing their team back to the office after months of remote working throughout the pandemic, as well as providing a more agile and digital workplace that suited the business today.

“We wanted to create a unique working environment that aided collaboration within the business, and allowed enhanced agile work practices, while also future proofing the space. The project would also allow a change in the culture by creating a smarter and more digital workplace that was a great place to work and a more inclusive environment.

“It was important for us to create a ‘sense of place’ and improve the wellbeing of our team, and a workplace that assists in the attraction and retention of talent and makes us stand out from the competition. We needed to provide flexibility for staff to work individually, collaboratively, and innovatively, but also provide privacy when needed.”

Neil Ashton, COO UK Coaching

Enter RA Real Estate

UK Coaching’s project had three key elements:

  1. To find new premises that would facilitate this adventurous project
  2. A solid brief for the desired fit out
  3. To exit the existing property.

To kick things off, UK Coaching appointed Richard Ashmore of RA Real Estate, a commercial property expert in Leeds and the surrounding areas, who helped them to find new premises and develop a full technical brief and tender document for the fitout.

Next on the to-do list in September 2020 was the tender process, i.e., inviting design and build contractors to submit proposals for the project, and that is when they met the team at Absolute Interiors.

Absolute Interiors

Absolute Interiors, a design and build contractor, can fit out any commercial space but many of their projects involve offices, restaurants, and bars. In the current climate, they are working with businesses throughout the UK helping them to create a positive return to the office for their staff.

“We are there to bring our client’s vision to life and facilitate where they want to take to their business. We pride ourselves on our design choices being grounded in research and statistics, not just on aesthetics. For UK Coaching, one of the big challenges was moving the business from 12,000 square feet spread over 5 levels – which was not suited to collaborative working – to 5,000 square feet of flexible co-working space. It was also vital that we gave them a space that represented the brand, somewhere they could be proud of inviting clients, partners, and even family and friends.”

“Without doubt Absolute were the best to present. Not only had they matched the brief perfectly, but they ran the presentation more as a consultation engaging us from the start. The team all presented, and they all came across as knowledgeable, realistic, yet adventurous in terms of what we could achieve on a relatively small budget. Their imagination knocked us out the park.”

Neil Ashton, COO UK Coaching

Financing the project with Bluestone Leasing

When it comes to paying for an ambitious project like UK Coaching’s, while paying upfront in cash is an option, more and more businesses are choosing to be more creative in their approach. As one of our partner companies, Absolute discussed the lease financing option with UK Coaching during the initial proposal stage.

“We always mention the option to finance with Bluestone Leasing at the beginning of the process so that the client is fully aware of their options and can make the best decision for their current budget and future plans.”

UK Coaching decided to consolidate the costs and spread the payments over time via a finance lease.

In the midst of a pandemic, the option to finance over a number of years was preferable as it enabled us to release cashflow and therefore provide more support to more coaches during this difficult time.”

Neil Ashton, COO UK Coaching

Absolute Interiors introduced UK Coaching to Patrick Iyoyin at Bluestone Leasing who was able to arrange a finance deal that enabled UK Coaching to get the workspace they needed while still retaining their cash so they could continue to support to coaches in the UK.

“Our aim throughout was to tailor a bespoke finance solution around the specific needs and requirements of UK Coaching. This meant we utilised a banking facility that was flexible to allow for various fitout and furniture assets, but also IT equipment for their digital upgrade.”

Patrick Iyoyin, Regional Account Manager, Bluestone Leasing

“Bluestone Leasing’s service was good and the commercial rates were competitive, and we would use them to finance further assets in the future.”

Neil Ashton, COO UK Coaching

UK Coaching’s new offices and the future

The project was finished in March 2021, and while COVID restrictions delayed the team’s ability to make full use of their new space, the results have certainly been worth the wait. The organisation now has an innovative, unique, and agile working environment that includes:

  • A central break out space
  • Amphitheatre for pitching to an audience/presentations
  • Social areas for breaks and evening entertainment
  • Sound barriers above desks for staff who spend a lot of time on the phone
  • More private ‘snugs’ for project work or collaboration.

“What Absolute have achieved with the budget is amazing, the added value, the trimmings and the extra details are incredible. We really enjoy the space which is near the city centre amenities and transport links. It is conducive to collaborative work in a digitally minded world, but possibly the most significant achievement made possible by the fit out has been giving people a sense of hope and optimism after an isolating period.

“Just like our new offices, UK Coaching’s future is bright and dynamic. To all intents and purposes, we are a new and dynamic organisation, here for the coach. We will represent coaches as a collective, support their learning and development to inspire their participants and communities to be active.”

Mark Gannon, CEO UK Coaching

How to compare asset finance deals

We would like to introduce you to a lovely man called George. George is 34 years old, has a dog called Benji, and runs his own digital marketing company.

George is planning to fit out his business offices to give his team a modern working environment that promotes collaboration and flexibility, and that enables them to host client meetings with pride.

George has already spoken with a finance broker and decided not to pay for his office fit out in cash, but to spread the cost over three years via a finance deal. This means that he will keep cash in the business to invest elsewhere and will also unlock some tax benefits he would not otherwise have received.

So far so good, but last night George could not switch off to sleep, and this time it was not because Benji was snoring.

Had he chosen the right finance deal?

Could he be getting better value for money elsewhere?

He had only compared interest rates when choosing a provider… what else should he have been looking for when choosing the best finance solution for his business?

Don’t be like George.

Make sure you read this article on comparing asset finance deals before you make your choice.

How to compare asset finance deals

When comparing asset finance it is important to consider several elements of the deals on offer, as a rate versus rate comparison should never be relied on in isolation.

For example, there will be key differences between the type of facility (e.g. finance lease, hire purchase, operating/residual value lease), the term (or length) of the agreement, any deposit requirements, the profile of the payments, additional fees and benefits such as tax savings.

Undoubtedly trying to get to grips with your finance quote can be a daunting process, even for those who have some experience but, luckily, we’ve been doing just that for over 25 years and are happy to share some of our knowledge. Here are just a few tips and pointers to help you get a true comparison.

Using Your Own Bank

Naturally many businesses rely on their primary bank and understandably turn to them for help with other funding requirements. Recent surveys suggest that more than 80% of SMEs rely exclusively on their main bank for all their financing needs and most cite either lack of awareness of alternative finance products, or access to them, as the main reasons for doing so.

In fairness, High Street banks are generally not experts in asset finance and often rely on specialist and centralised divisions. The most common complaint we hear from our customers about the performance of their banks when they do enquire about asset finance, or other alternative products, is the sheer amount of time it takes to get any form of answer. This might be fine if you’re under no time constraints, but most businesses aren’t that fortunate, and delays can be very costly.

The main points to consider should you seek the help of your bank are:

FACILITY TYPE

Check that you know what you are being offered. Very often a loan or hire purchase (HP) product are the default which might not provide you with the optimum outcome, especially with regards to tax benefits.

FACILITY SCOPE

Often the facility will be limited to just the assets alone and will exclude any additional intangible costs such as labour and fees. Using a specialist, such as Bluestone Leasing, you can often achieve 100% project cost funding.

SECURITY

Often bank facilities require security, typically in the form of guarantees or otherwise. It is noteworthy that over 80% of the facilities that we arrange are on a totally unsecured basis even for relatively ‘weak’ (i.e. those will little or no residual value) assets.

RISK

Bank facilities are very typically offered on a rescindable basis with a foreclosure clause as standard. That means that you are at risk should the bank ever decide to call in the debt at any point which they are entitled to do without explanation or notice. In practice this would mean having to pay the full outstanding balance on demand. By comparison, all our facilities are free of this encumbrance – as long as you make the regular repayments, the agreements are never rescindable.

Using other asset finance providers

There are many providers out there, not just your own bank, who can help you with asset finance and other alternative products. 

Once you’ve chosen a partner, and especially if you are looking at more than one offer, you will still need to make sure that you are getting best value. There is no standard way that businesses in the sector present their finance quotations – some might provide a wealth of information and others are little more than the headline rate. There are a few basic elements to make sure you are clear on if you want to fully understand any offer of asset finance and be able to compare it to another.

IS THERE A DEPOSIT OR UPFRONT PAYMENT?

Although it is normal to pay 1-3 payments upfront, larger deposits can artificially make the repayments look low. An easy way to avoid this is to calculate the total cost of any facility by adding together the standard repayments along with any deposit and indeed any other fees.

For example, one quote (quote A) gives you a monthly repayment of £100 over three years whilst an alternative provider (quote B) offers you £120/month over the same period.

On face value quote A is the best value until you discover that quote A requires a £1,000 deposit whereas quote B has no deposit requirement. Total repayments for quote A is actually £4,600 (£100 x 36 + £1,000) whereas quote B is only £4,320 (£120 x 36).

WHAT ARE THE FEES?

Again, although arrangement fees and documentation fees are the norm, make sure you know what they are beforehand and see how they compare to any other offer you may have. Add them into your calculation for the total cost. You can also usually expect a small (£20-50/year) administration fee charged by the funder to cover customer support costs (e.g. replacement/copy documentation) during the term of the agreement.

WHAT IS THE PROFILE?

The profile is normally expressed as the first payment followed by the normal payments thereafter. For example, a five year agreement paid monthly could be offered as a 1+59 (one payment followed by 59 further monthly payments) or 3+57 (three payments upfront followed by 57 monthly payments) profile.

Our advice is to be suspicious of unusual profiles, especially ones which artificially look to be better than they are. For instance, if you are offered, on paper, a five-year agreement but the profile is 3+59, you are actually paying the equivalent of five years and two months. The monthly amount may look lower a result but will not be so attractive when you compare the total amount paid to an equivalent true 60-month agreement.

IS IT APPROVED?

There is a world of difference between a quote for finance and an actual approval with funds secured. Make sure that you know what you have been presented with and get confirmation in writing. Professional providers will generally send you a formal confirmation when finance is approved and you don’t want to find that the figures have changed only when the documents arrive for signature.

ANY CONDITIONS?

Sometimes finance approvals are subject to conditions from the funder who has underwritten the facility – this might include anything from simple provision of regular management information through to personal guarantees and other security. Ensure that you have been advised of these conditions upfront before you commit.

WHAT HAPPENS AT THE END OF THE DEAL?

Depending on the type of agreement that you’ve entered into, you might have a range of options at the end of the agreement. If your agreement is fixed term, it will come to an end at the end of agreed period, known as the primary term, whereas a minimum term agreement will continue after the primary term unless you instruct the funder otherwise, giving them suitable notice as set out in your agreement.

You might want to give the assets back to the funder or pay a final fee to keep them thereafter forever. If you know what you will want to do at the beginning of the agreement, you can even get that put into writing with the funder upfront to prevent any confusion at the end.

How to get the right finance solution for your business

The best asset finance deals are those that are tailored to your unique business and projects, and that is what we specialise in at Bluestone Leasing. In the future, George will be taking the time to review all his asset finance options and ensure that he is comparing like for like deals. That way, George’s business will have the best shot at financial growth, and he and Benji will sleep soundly at night.

If you are planning to invest in assets or expansion in your business in the near future and would like to spread the cost, keep cash in the business, and potentially unlock significant tax benefits, a bespoke finance solution could make that happen.

Want to find out more about investing in assets using a finance lease? Click here to get in touch.

Is it a bird? Is it a plane? No, it’s the Super-deduction

When Rishi Sunak stepped forward to deliver the March budget, he must have felt the eyes of every business owner in the UK on him. More than 12 months into the COVID-19 pandemic that has devastated our economy, how was the government going to stimulate investment and growth? How would Mr Sunak inject some much-needed hope? Would he be wearing a red cape, waving a magic wand, or brandishing a giant mythical hammer?

No such luck, but he did come out armed with a metaphorical tax hammer and some almost magical words for UK businesses: “Today I can announce the ‘Super Deduction’.”

PLEASE NOTE: The super-deduction is only available to companies paying corporation tax, not to individuals, sole traders, or partnerships paying income tax.

What is the super-deduction?

After one of the worst periods in recent economic history, the government’s message to both consumers and businesses is the same: Spend, spend, and then spend a little more. Please.

Unfortunately, with so many businesses focusing on trying to keep their heads above water, investing in new assets is unlikely to be top of their to-do list.

To ease – or kick – businesses into action, the government has announced the super-deduction. By knocking up to 25p off their tax bills for every £1 spent on qualifying plant and machinery between April 2021 and March 2023, the plan is to encourage companies to invest, and therefore grow, sooner rather than later.

What’s so super about the super-deduction?

Prior to the super-deduction, under the Annual Investment Allowance (AIA), companies could deduct 100% (up to £1 million) of the cost of assets from their taxable profits. As of April 2021, companies paying corporation tax can deduct up to 130% of the cost of new assets from their taxable profits.

To illustrate the potential savings on offer for UK companies that pay corporation tax, here are a couple of examples.

Company A – spending £100,000 on qualifying assetsCompany B – spending £500,000 on qualifying assets
Before super-deductionVia the AIA, the company deducts £100,000 (100% of the cost of the assets) from their taxable profits.

When corporation tax is applied to taxable profits at 19%, they receive a £19,000 reduction on their corporation tax bill.
Via the AIA, the company deducts £500,000 (100% of the cost of the assets) from their taxable profits.

When corporation tax is applied to taxable profits at 19%, they receive a £95,000 reduction on their corporation tax bill.
After super-deductionVia the super-deduction, the company deducts £130,000 (130%) from their taxable profits.

When corporation tax is applied to the remaining taxable profits at 19%, Company A receive a £24,700 reduction on their corporation tax bill.
Via the super-deduction, the company deducts £650,000 (130%) from their taxable profits.

When corporation tax is applied to the remaining taxable profits at 19%, Company B receive a £123,500 reduction on their corporation tax bill.
Additional tax savings due to the super-deduction£5,700£28,500

Is it really that simple?

When are taxes simple? These examples have been included for illustrative purposes only, as every business’ financial situation and investment will be different. For example, restrictions may apply if an accounting period straddles the dates of the schemes, and not all assets are eligible for the super-deduction. There are also ‘clawback rules’ on super-deduction investments which might mean that businesses could be charged significantly if they sell the items at a later date. The super-deduction is a final tax relief which means it will be applied after all other tax deductions in that tax year. The super-deduction cannot create a taxable loss.

Thinking of investing in assets for your business? Want to make the most of the super-deduction tax benefit but not sure where to start? We can help. Click here to get in touch.

What will happen when the super-deduction ends?

Shockingly, the government is not offering the super-deduction out of the kindness of their hearts. The super-deduction is a temporary incentive intended to get the economy moving as soon as possible.

From 1st April 2023, corporation tax will increase from 19% to 25% for companies with over £250,000 in taxable profits, and without careful planning, those businesses will find that their super-deduction benefits will be nullified once they are paying the higher tax rate. For companies with less than £50,000 in taxable profits corporation tax will remain at 19%.  Businesses with taxable profits between £50,000-£250,000 will pay the main rate reduced by marginal relief.

The AIA’s upper threshold of up to £1 million will only be available until 31st December 2021 when it will reduce to £200,000.

It is important to seek professional and bespoke financial advice for your business to ensure that you make the most of the super-deduction scheme while it is available and that you have planned for future rises in corporation tax.

Which companies are entitled to claim the super-deduction?

The super-deduction is available to companies of all sizes, as long as they pay corporation tax, and the assets they are investing in are eligible.

The super-deduction is not available to individuals, sole traders or partnerships.

In addition to the super-deduction, the government has also announced that within Freeport tax sites, companies can access Enhanced Capital Allowances (ECA+), and that companies, individuals, and partnerships can access an increased level of Structures & Building Allowances (SBA+) until 30th September 2026.

Which assets are eligible for the super-deduction?  

According to HMRC, “Most tangible capital assets used in the course of a business are considered plant and machinery for the purposes of claiming capital allowances.”

To qualify for the super-deduction, the assets must be new and unused, so second-hand equipment will not be eligible. 

Examples of eligible plant and machinery assets include, but are not limited to:

  • Solar panels
  • IT equipment and servers
  • Office desks and chairs
  • Tractors, lorries and vans (not cars)
  • Refrigeration units
  • Electric vehicle charge points
  • Foundry equipment
  • Compressors
  • Drills, ladders, cranes
  • Tools
  • Business mobile phones
  • Air conditioning.

The super-deduction first year allowance of 130% will apply on qualifying main rate plant and machinery like those listed above, but special rate and long life assets will only qualify for 50% first year allowance (FYA).

The government has provided the following table as a guide to which investments are eligible for which tax benefits. This table was correct as of 28th April 2021, but the most recent information can be found here: Super-deduction – GOV.UK (www.gov.uk).

Bought newBought 2nd-handAssets held for leasingMain rate assetsSpecial rate assetsNew disposal rules
Super-deduction (130% FYA)XXX
Special Rate (50% FYA)XX
Annual Investment Allowance (100% up to £1 million)XXXXX
Writing Down Allowances (18%)XXXX
Writing Down Allowances (6%) XXXX
Freeports (100% ECA, uncapped)XXX

Are assets purchased on finance eligible for the super-deduction?

There are some additional conditions to be aware of if you are using finance to buy your assets. Specifically, the super-deduction only applies to “the person to whom [the equipment] is bailed or hired is the person who incurs the expense”. To ensure this, the following conditions need to be met in order for a financed asset to qualify for the super-deduction:

  • You are paying a periodical sum and in return plant and machinery assets are “bailed” (hired) to you.
  • Eventually you can end up owning those assets (such as by exercising an option to purchase or paying a fee).
  • The person hiring/receiving the goods is the one paying for it (to ensure that the business rather than the finance lender benefits).

How to take advantage of the super-deduction

If you are running a company that pays corporation tax and want to take advantage of the super-deduction while it is available, get in touch with Bluestone Leasing. We can help you to understand how the super-deduction could benefit your business as well as how asset finance could fit into your future growth strategy.

Thinking of investing in assets for your business? Want to make the most of the super-deduction tax benefit? Click here to get in touch.