Professional Indemnity (PI) Insurance Loans: Key Features and Benefits

Professional indemnity (PI) insurance is key for those who offer a professional service, give advice or handle another firms’ data or intellectual property. The insurance covers you if your client suffers a financial loss due to work you have carried out for them. 

Paying PI insurance is essential and one of the largest costs that organisations have to meet, but many do not realise that they can spread the cost over time with PI insurance loan. Read on for more information.

What is professional indemnity insurance?

If you make a mistake in a piece of work for a client that causes them financial or reputational loss, you may find yourself facing legal action and/or a claim for compensation. Professional indemnity insurance protects you and your business for the costs of compensating a client. Having PI insurance is not a legal requirement for all businesses, but it is a widely used form of protection for businesses in many sectors. 

Who needs professional indemnity insurance?

Paying for professional indemnity insurance is popular choice for small businesses or self-employed people that provide professional services to other businesses or individuals. This might include tradespeople or contractors who are working in the premises of other businesses or in private homes, IT companies that manage another business’ website or computer network, businesses that provide advice to their clients, or even businesses that handle confidential information or copyrighted material for their clients. 

If there is a risk that your professional service could cause damage to your clients should you make a mistake, or even if your business is subject to a cyberattack that compromises client data, PI insurance should be a top priority. 

What does professional indemnity insurance cover?

Professional indemnity insurance typically covers:

  • Professional negligence, i.e., if you give incorrect advice or make a mistake.
  • Defamation, i.e., if you produce or support libellous statements about your client.
  • Breach of confidence, i.e., if you share sensitive information without permission
  • Breach of copyright, i.e., if you infringe on copyrights, trademarks or intellectual property
  • Lost or damaged documents, i.e., if you lose or damage documents while they’re in your care
  • Employee cover, i.e., if an employee causes a loss for your client.

Funding PI insurance with a loan

Paying PI insurance is essential and one of the largest costs that organisations have to meet. While PI insurance is an important form of protection for businesses, paying for PI insurance can be a significant cost to a business. This can impact a business’ cashflow, delaying their growth and affecting their operational capacity. There is an alternative, however, in the form of a PI insurance loan. 

A PI insurance loan allows you to spread the cost of cover over a 12 month period. The interest on the loan and the repayments are fixed, making it easier to manage your budget and keep capital in the business. This leaves you with more money to invest elsewhere in the business or to keep in the bank to cover unexpected costs, bills, or downturns in revenue. 

Interested in a PI insurance loan for your business?

We can help businesses to by obtaining the best funding options and facilities, quickly and efficiently, whilst ensuring your short-term goals and long-term ambitions are considered in your financial strategy. 

If you are interested in spreading the cost of your PI insurance over time to retain capital and enable you to manage your budget more effectively, get in touch with us today.

We will assess your business’ individual circumstances and work with you to decide if a PI insurance loan or another finance solution would be the right choice.

Complete the form below to send us an enquiry.

Case Study: Dean St. Studios

Dean St. Studios used £170,000 of finance to help fund one of the most advanced Dolby Atmos mixing studios in the world. The studio helps creators to deploy a three-dimensional sonic experience that delivers a new level of listener experience. 

The service simplifies the complicated, preparing and compiling each mix to the highest quality standards and guidelines, ensuring all finished mixes are provided in a format ready for all streaming platforms. 

Being able to deliver audio in this new format helped Dean Street secure work with some of the worlds most respected film and music companies who demand only the highest quality results.

About Dean St. Studios

Dean Street Studios was originally used in the 1950’s as a film studio, but its musical history began when the studio became Zodiac Studios and later Good Earth Studios, when legendary producer Tony Visconti bought it and changed the name. Tony Visconti recorded music for the likes of David Bowie, T-Rex, Thin Lizzy, U2 and many others. In addition, artists such as Tina Turner, Wham!, The Smiths and Duran Duran, would hire out the studios independently to record. 

In 1989, Visconti sold the premises to a production company who developed some of the building into music recording and production suites. During this time, the likes of Robert Plant, Pink Floyd, Tim Finn, Brian Molko, Bruce Hornsby, and Cliff Richard all worked at the studio, with the great Dusty Springfield recording her last ever track in Studio 1 in 1995. 

In 2007, now as Dean St. Studios, the studio is still making history with artists such as Adele, Noel Gallagher, John Legend, Florence + the Machine, Plan B, Tom Odell, Take That and Jonas Blue. 

Bluestone have been a delight to deal with. The whole process was straightforward and dealt with by the excellent personable team of Myles and Alex.” Jazz Lee, Managing Director, Dolby St. Studios 

The Solution 

Bluestone received an introduction to Dean Street via Veale Associates, a Bluestone partner and one of the most respected studio design companies in the world. Owner and lead designer Edde Veale even received a mention on a Beatles track via John Lennon.

Dean Street’s project incorporated 5 different suppliers and was syndicated between 3 funders so the full project value could be financed. The client was offered both Hire Purchase and Finance Lease options and after reviewing both, the client opted for Hire Purchase agreements as they best met their requirements. 

“It’s been an absolute pleasure to work with Jazz and the Dean Street team. They are a wonderful bunch & it’s very rewarding to have helped finance one of the world’s leading Dolby Atmos studios.” Alex Judd, Bluestone Leasing

Interested in finance for your business?

We can help businesses to by obtaining the best funding options and facilities, quickly and efficiently, whilst ensuring your short-term goals and long-term ambitions are considered in your financial strategy. 

If you are interested in a loan or asset finance for your business, get in touch with us today. We will assess your business’ individual circumstances and work with you to decide which, if any, finance solution would be the right choice. 

Complete the form below to send us an enquiry.

Introducing Bluestone: Gemma Grainger

Gemma is our regional account manager for East Midlands North. Since joining Bluestone Leasing in 2022, Gemma has established herself as an approachable, personable and hard-working member of the sales team. If she is not out of the office meeting with a potential new client or partner to help them understand the benefits of finance, you will find Gemma on the phone providing advice and support to one of her existing partners or customers.

“I immerse myself into my partners and customers businesses, understanding their needs and bug-bears, and recommending the best solutions to help them achieve their long-term aspirations. I recently had my first client meeting which I really enjoyed – I’m looking forward to speaking to and supporting more of my clients.”

The early days

Gemma grew up in Tamworth with many fond memories, particularly of dancing ballet, which she has done since she was three. Her favourite subject as school was English (particularly Shakespeare), made all the more enjoyable by her amazing English teacher. 

I really wanted to be a dancer (ballet, contemporary, modern and Jazz). I grew up dancing but ballet was always what I was best at. I have won some awards and danced in the winter gardens in Blackpool as well as in London.

The world of work   

Gemma began her career working in recruitment for clients wanting to lease pubs. Since then, she has spent the last few years in the role of internal sales manager at Grenke Leasing, where she was focused on new partner acquisition and delivering excellent customer service to clients, including helping them to generate more business through finance.

Right from my first interview with the CEO, I got a sense that the people at Bluestone were friendly and approachable. I knew from then that it would be a good company to work for. Everyone is extremely supportive, open, and approachable. From the MD to the admin team everyone is treated equally and it’s just a fab place to work.”

Gemma really likes that no day is the same, working with people and the diversity of her role. 

Gemma wants to be remembered for…

‘Making people smile and always dancing around to cheesy songs.’

What does the future hold for Gemma? 

After already completing a solo parachute jump, Gemma has ambitions to undertake a freefall skydive, as well as continuing to spend her time with her family and dog who all keep her on her toes. 

Gemma is a huge lover of food, so cooking and going out for a nice meal is something she enjoys doing (when she’s not doing to watch the kids play football, rugby or boxing…)

When it comes to her work with Bluestone, Gemma is exited to build new relationships while continuing to support them in achieving their long-term aspirations. 

If you would like Gemma to help your business to move forward with a bespoke finance solution, get in touch today with her today. 

gemma.grainger@bluestoneleasing.com

How Your Businesses Can Tackle Rising Energy Costs and Make the Most of Your Office Space

What Do Further Energy Cost Rises Mean for SMEs?

With energy bills continuing to rise, SMEs are still faced with the challenge of maximizing profits and streamlining their costs amid tough economic times. Both gas and energy prices have shot past record highs which have been felt across homes across the country, but just how much do these price changes affect small businesses around the country?

Businesses are essentially affected in the same way as households are, meaning as the price cap increases, the higher the energy bill will be.

However, unlike domestic customers, businesses have a lot less protection when it comes to energy because regardless of the business’s size, the energy price cap does not apply to businesses.

How to Strategically Tackle Rising Office Energy Bills

Running a business can be expensive and expenses can quickly add up, so cutting down on your overall energy usage is a great way to combat the rising energy costs. Here are a few ways you can reduce your business’s energy usage:

  • Switch off appliances that aren’t in use

Whilst in standby mode, appliances can still use up to 50% of the electricity they would when in operation. So, ensure they are kept off when not in use.

  • 2. Use energy-efficient light bulbs

Replace old incandescent light bulbs with energy-efficient ones. LEDs can help save you as much as 80% on electricity.

  • Switch everything off at night

Make sure you switch off appliances like vending and coffee machines, these will waste energy if left on overnight.

  • Upgrade appliances

Look into upgrading older appliances for new, more energy-efficient models as this will have a significant impact on the amount it will cost you a year.

  • Share the brew

Instead of individual tea runs, make the most of your kettle’s capacity and offer to make a brew for your colleagues. The cost of making a cuppa may seem insignificant, but you could save a pretty penny each year when you use your office kettle effectively.

Why Offices Spaces Are Still Important for Businesses

As remote work roles increase and more and more employers adopt a hybrid working system, some may question if investing in a dedicated office space is necessary for businesses of today.

If anything, the COVID-19 pandemic showed how important it is for businesses to be agile and able to work in challenging and changing times. During the COVID outbreak, businesses were forced to close the doors to their offices and switch to running their operations and workflow remotely. This change has ultimately imprinted a shift in the way people work and the ways businesses utilise their office space.

It’s clear that remote working has come with both its positives and its drawbacks, so let’s explore some of the reasons why having a dedicated office space is beneficial.

  1. Offices help promote the company culture and connect people
  2. Offices separate work and home life
  3. Working from the office makes quality assurance and productivity management easier
  4. Offices encourage collaboration
  5. Offices help promote professional development

Offices provide a central hub for people to work and collaborate on tasks and projects in an environment that allows them to separate from the challenges of home life by being connected with their co-workers and submerging into their company culture.

Is It Time for You to Invest in Your Office Space?

Finance for renewable energy tech

Making simple changes to how you manage your energy consumption in the office will make a difference to your energy bill, but how much of an impact will investing in how you use energy make?

Investing in solar panels for your business would have a significant impact on the business’ overall environmental footprint, and would play a part in saving you money each year. 

Here are a few things you should know about commercial solar panels for businesses:

  1. Over the 25-year lifetime of solar panels, you’ll have saved thousands of pounds on energy.
  2. Energy from commercial solar PV will cost a fraction of what you were paying from a utility company.
  3. Solar panel maintenance cost in the UK is relatively low, so you’ll be able to enjoy reduced overall expenses for your electricity consumption.
  4. Reduce your dependence on imported energy and finite resources.

Similarly, investing in switching to LED lighting will prove to be an investment that is well worth it in the long run. Commercial LED lighting has a lot to offer your office space, here are some of the benefits you can expect:

  1. Reduction in energy use – LED lights can reduce your energy consumption anywhere from 50-90%, which can equate to huge savings on your utility bill.
  2. Longer-lasting – LED lights have a long lifespan and can provide up to 50,000 hours of use.
  3. Increased light quality – LED bulbs come in a variety of styles and colours that give you more control and flexibility over your interior lighting design.

Solar panels and LED fittings can both come with upfront, installation, and maintenance costs, which can add up to a high initial investment. However, by financing these assets, you’ll be able to secure and finance your solar panels and LED lights, and spread the costs of investment which will allow you to reap the cost-saving benefits faster than you would by buying them outright.

Finance for office fit-out projects 

Whether you’re looking to update the layout of your office to adopt a hotdesking style of work, or you’re looking to refurbish, and kit-out cubicles for your office, now is the time to invest.

Financing your office workspace project would allow you to retain capital that can be utilised somewhere else in the business. This is great for those looking to invest in redoing their workspaces because fit-out projects can be expensive, so, financing your office renovation would provide you with a way of paying the cost of your project with regular fixed payments each month.

If you’re interested in finding out more about how we can support you with financing your office interiors or renewables projects, get in touch with us at info@bluestoneleasing.com, or give us a call on 01924 248 800, we’d be more than happy to help with any of your financing needs.

Invoice Finance: Key Features and Benefits

Invoice finance can ease cash flow problems by enabling you to get paid faster for completed work, meaning you can carry on growing without being held back by your finances. Rather than waiting days or weeks for your invoices to be paid by customers, an invoice finance facility means that lenders will advance you most of the value of the invoice immediately. 

Read on for more information on invoice financing. 

How does invoice financing work?

Invoice finance is a collective term for the various types of invoice based lending such as invoice discounting, selective invoice discounting, invoice factoring and spot factoring. As invoice financing is an unsecured business loan in place of your invoices, you won’t have to offer up physical assets from your company.

The concept for invoice finance is simple. When you raise a customer invoice, you do not need to wait for days, weeks or months for them to pay it. Instead, you also send the invoice to a lender. The lender will advance you up to 95% of the value of the invoice straight away. 

This means that you will get paid faster, boosting your cash flow and enabling you to focus on running your business.

When the customer has paid their invoice, you repay the lender. There will be interest and/or a processing fee to pay the lender for their service. 

Types of invoice finance 

There are two types of invoice financing: invoice factoring and invoice discounting. 

Both facilities can give businesses more control over their finances, but the key difference to keep in mind is whether you want to be able to control the invoicing process for your business or have the lender take care of it for you. 

Invoice factoring

With an invoice factoring facility, the lender provides a ‘credit control’ functionality on your behalf, chasing late payments and performing credit checks on potential customers so you can concentrate on running your business. In this scenario, your customers will know you’re using a factoring provider. This option is often better suited to younger businesses or those with a smaller turnover. 

Invoice discounting

With an invoice discounting, you maintain credit control which means you can manage your client relationships. This is a more time-consuming approach as you will need to chase payments yourself. Invoice discounting is generally available to more established businesses with higher turnover.

Selective or spot invoice finance 

If you choose either an invoice discounting or invoice factoring facility, you will be asking a lender to deal with all your customer invoices. This all or nothing solution may not be right for every business, but there is an alternative in the form of spot or selective invoice finance. 

The selective product enables you to choose which invoices you want to finance and which you would like to manage as normal. This ad-hoc strategy might be more suitable if you only want to finance certain types of customers or those that regularly take a long time to pay.  

Why use an invoice finance facility?

As with any commercial finance product, there are both pros and cons to consider. Some of the advantages of choosing either an invoice factoring or invoice discounting facility are:

  • Quicker access to cash as it will be available from the lender as soon as the invoice is raised. This cash can be used to grow your business, invest in stock, or cover operational costs. 
  • Invoice finance provides a quicker turnaround than other forms of finance such as loans. 
  • Invoice finance is an unsecured finance product so your assets will not be at risk. 
  • Invoice discounting can help convert credit sales into cash enabling quicker growth and development in a shorter amount of time.

Invoice finance: Things to consider 

  • Only suitable for B2B: Invoice financing is only available on commercial invoices meaning your customers have to be other businesses, not the general public.
  • Managing client relationships: If you choose to apply for invoice factoring, then chasing payments will be out of control to an extent. This means your client relationships could potentially be a risk of damaging these relationships.
  • Long-term costs: Whilst invoice financing can be a great short-term solution for cash flow, there may be processing fees and interest to pay which can add up over time. 

Example of invoice factoring in action

Gemma, owner of Smart Interiors Ltd, is about to start a big new office fitout project. Gemma knows she’ll need to pay for extra materials and take on another member of staff to do this new job, but she’ll only get paid when it’s finished.

Gemma is owed £10,000 by a previous client for a completed project, but the invoice has payment terms of 30 days. Gemma agrees to an invoice finance deal that will give her 85% of the invoice up-front, with total fees and charges at 3%.

  • Invoice value = £10,000 
  • Advance amount (85%) = £8,500 
  • Fees (3%) = £300 

When Gemma sends the invoice to the lender, she receives an advance of £8,500 within a couple of days. Then, when the customer pays the invoice, the full £10,000 goes into a bank account controlled by the lender.

Gemma gets the remaining value of the invoice (£1,500) minus the lender’s 3% fee (£300), so she receives £1,200.

Interested in an invoice finance facility for your business?

We can help businesses to by obtaining the best funding options and facilities, quickly and efficiently, whilst ensuring your short-term goals and long-term ambitions are considered in your financial strategy. 

If you are interested in an invoice finance facility, get in touch with us today. We will assess your business’ individual circumstances and work with you to decide if invoice finance or another finance solution would be the right choice.

Complete the form below to send us an enquiry.

What is a VAT Loan? Key Features and Benefits

Paying VAT bills every quarter is a legal obligation, but it can be a financial obstacle for many businesses, especially in the current financial climate. Cashflow issues are a common side effect of each quarterly payment. However, what many do not realise, is that it doesn’t have to be like that. 

Many business owners are taking the sting out of paying VAT bills by taking out a VAT loan to ensure HMRC are paid in full and on time and then repaying the loan in instalments over time. This can help businesses to retain valuable cash, avoid late payment penalties, and establish a healthier cashflow. 

Read on to discover more about VAT loans.  

What is VAT?

VAT stands for Value Added Tax. 

It is added to the price of a product or service at every stage of production, distribution, or sale to the end consumer. If the end consumer is a business that collects and pays VAT to the government on its products or services, it can reclaim the tax paid. If the end consumer is not a business or is not registered for VAT, they cannot reclaim the tax paid.

Many products and services in the UK are liable for VAT – that is, they are not VAT exempt. Goods and services that are not exempt typically accrue VAT at the following rates:

  • Standard rate: 20% (most goods and services).
  • Reduced rate: 5% (some goods and services, such as home energy and children’s car seats).
  • Exempt rate: 0% (includes basic and essential items such as most food and children’s clothes).

VAT registered businesses collect VAT on behalf of HMRC and must pay the collected tax (minus any reclaimed tax), to the government on a regular basis – usually quarterly. Most VAT must be paid one month and seven days after the reporting period, but some types of business will have different payment requirements. 

Businesses must register to pay VAT if: 

  • They expect their VAT taxable turnover to be more than £85,000 in the next 30-day period.
  • They had a VAT taxable turnover of more than £85,000 over the last 12 months.
  • The taxable turnover is on sales of goods and services that would be liable to VAT.

Every VAT registered business receives a unique VAT number which must be shown on invoices and most receipts.

It is important to paying VAT bills on time to significant penalties and surcharges. If a business is struggling to pay their VAT bill, they might consider avoiding late payment penalties and keeping cash in the bank by taking out a VAT loan.

What is a VAT loan?

A VAT loan is a type of commercial loan used to pay the quarterly VAT payment to HMRC. 

If a business is struggling with cashflow when their VAT is due to be paid or they would rather invest their cash into the business (e.g., to buy new assets), they might apply for a VAT loan. The lender pays HMRC the amount owed in full, and the business pays the lender back in instalments over time. Repayments are subject to fixed interest rates (which will vary depending on the business’ circumstances )and typically made on a monthly basis over 3, 6, 9 or 12 months. 

The amount a business can borrow will depend on the unique circumstances of the business and eligibility. In addition to credit checks and a review of the business’s financial situation, other eligibility criteria will usually apply, often including:

  • the business is VAT registered
  • turnover is more than £85,000 ex-VAT
  • UK business
  • usually a limited company, although partnerships and some sole traders may also qualify
  • trading for more than one year.

Why would a business use a loan to pay VAT?

  • A VAT loan ensures that HMRC receive their payment in full and on time, helping your business to avoid late payment penalties. 
  • A VAT loan can prevent you from parting with a large chunk of cash that could be put to better use in your business, i.e., to be invested in growth. 
  • VAT loan repayments can be made on a monthly basis rather than making quarterly VAT payments which can help to maintain a healthy cashflow. 
  • VAT loans do not use existing banking or credit facilities and may be arranged as ‘rolling’ or drawdown borrowing (subject to eligibility). This allows the borrower to use loan funds on a fluctuating basis.

Disadvantages of VAT loans

  • Interest will be applied to a VAT loan, so while the payments will be spread over a longer period of time businesses will pay more overall. 
  • VAT loans cannot be used to pay other tax liabilities such as corporation tax, although it is possible to obtain a loan to cover corporation tax bills. 

Interested in a VAT loan for your business?

We can help businesses like yours to obtain the best funding options and facilities, quickly and efficiently, whilst ensuring their short-term goals and long-term ambitions are considered in their financial strategy. 

If you are interested in spreading the cost of your VAT bill over time to retain capital and enable you to manage your budget more effectively, get in touch with us today.

We will assess your business’ individual circumstances and work with you to decide if a VAT loan or another finance solution would be the right choice.

Complete the form below to send us an enquiry.

How to decide whether to lease or buy assets

Almost all businesses reach a point when they need to spend money on new assets such as equipment or machinery in order to grow. These assets deliver a more efficient and effective operation lead to increased revenue and profits. Those profits can then be put towards further investment, leading to yet higher revenue and profits. 

However, if the assets are only ever funded by taking capital from the business, cashflow and growth are likely to be impacted. This is why many businesses choose to lease assets rather than buy them, but is it always the right decision?

Advantages and disadvantages of leasing business assets

Leasing assets can be a powerful way to fuel growth and improve a business’ financial agility. By leasing the assets that your business needs in order to grow, you can spread the cost over time via fixed regular payments and keep cash in the bank. At the very least, this gives you financial breathing space, a healthy cashflow and more flexibility, so you can put your mind – and the cash you’ve saved – to the task of building your business’ future.

There are two main forms of asset finance:

  • Leasing – renting it over a period in return for fixed rental payments. At the end of the lease the assets can be returned or you can continue to lease on an ongoing basis for a fee. 
  • Hire purchase arrangements – an initial deposit is paid towards the cost of the asset and the balance is then paid in instalments over a period of time. At the end of the hire purchase period, you would make a final payment and gain ownership of the asset.

Many businesses choose to lease equipment that has high maintenance costs, can quickly become outdated, or is only used occasionally.

Advantages of leasing assets

  • Businesses don’t have to pay the full cost of the asset up front enabling them to keep more capital in the bank for other areas or unforeseen circumstances. 
  • Businesses can access a higher standard of equipment, which might otherwise have been too expensive to buy outright.
  • Paying for the asset over time via fixed regular payments makes it easy to budget in the future and match repayments to income.
  • Interest rates are fixed enabling predictable costs and making it easier to forecast cash flow. 
  • Businesses can usually deduct the full cost of lease rentals from taxable income. 
  • Businesses avoid having to worry about overdrafts or loans used to pay for the assets in cash being withdrawn at short notice, forcing early repayment.
  • In the case of an operating lease or contract hire, businesses often do not have to worry about maintenance.
  • The leasing company carries the risks if the equipment breaks down
  • If the assets need to be upgraded or replaced businesses can simply make a small adjustment to their regular payment rather than invest a lump sum upfront.

Disadvantages of leasing assets

  • Businesses 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)
  • In some cases a deposit or advance payments might be required. 
  • The interest applied can make the assets more expensive in the long-term than they would have been when bought outright.
  • A business might find themselves locked into agreements that can be difficult to terminate should their financial circumstances change.
  • Leasing agreements can be more complex to manage than buying outright and may add to a business’ administration. 
  • Companies usually need to be VAT-registered to take out a leasing agreement. 
  • The business will not own the asset, although they may have an option to buy it at the end of the agreement.

Advantages and disadvantages of buying business assets

Advantages of buying assets

  • The business will fully own the asset (unless it is used as security for a loan)
  • Capital allowances can be claimed on the assets. 
  • Businesses are not tied into agreements that might be difficult to terminate. 
  • The assets are often cheaper when bought outright as businesses avoid paying interest. 

Disadvantages of buying assets

  • Paying for the asset outright means parting with a chunk of capital that can impact your cash flow.
  • If it is necessary to use an overdraft or loan to fund the purchase there is a chance they could be withdrawn at short notice and, in some cases, early repayment of loans can be demanded.
  • Smaller businesses might not get the same price as bigger businesses.
  • There is a risk that a business could buy assets that are not right for their needs with no option to upgrade or replace as there often is when leasing. 
  • The business is responsible for maintenance, repairs, and replacement of the assets.
  • Businesses cannot take advantage of the tax benefits of deducting the cost of rental from taxable income.
  • The value of the asset may depreciate over time and be worth less than the business originally paid for it. 

Understanding depreciation of assets

Over time the value of physical assets like machinery, equipment, or vehicles will decrease as they become worn and/or obsolete thanks to newer versions being released. This is called depreciation and is used in business accounting to write off the value of assets that you have bought. Depreciation means the cost of the asset is spread out over the years of its use, so it is written off against the profits of several years rather than just the year of purchase. It is not allowable for tax, but you may be able to claim the cost of some assets against taxable income as capital allowances.

To work out depreciation you need to know: 

  • the date you started using the asset
  • the asset’s estimated useful life
  • the asset’s initial cost
  • any possible value it may have at the end of its use – eg to be reused or reconditioned, or as scrap
  • any costs that may be related to disposal.

What are the tax implications of buying vs leasing assets?

There are tax implications and potential benefits to consider with both leasing arrangement and buying assets outright. To understand and compare the tax reliefs available to you it is worth contacting a finance professional such as your accountant, but a commercial finance broker or should also be able to explain your options to you.

Any commercial finance broker or leasing company that you use should be a reputable company that is regulated by the Financial Conduct Authority (FCA). 

What does Net Present Value mean?

When considering leasing assets you are likely to come across the term Net Present Value (NPV). In its simplest terms, NPV is the value of money today, compared to the value of the same amount, at a future point in time. When inflation is high, net present value becomes a more important consideration. As we are comparing you paying out cash today against finance that will require making fixed payments over a period of time in the future, we need to ensure that we are comparing like for like – £1 in the future is worth less than £1 today. This is why we need to apply a discount to the future rentals and tax savings to bring them into today’s value of money.

Before signing any finance agreement…

It is important that you seek professional and impartial advice before proceeding with any loan agreement, finance lease or hire purchase. You should also ensure that: 

  • Your contract corresponds with any verbal or written quotations
  • The period for which you need the asset is covered by the length of the leasing agreement
  • You are aware of any financial penalties that may be incurred if you wish to end the agreement early
  • The equipment you are leasing is new
  • You have read the contract carefully before signing it – checking the total cost, the period of hire and notice periods
  • You understand all the contract terms and conditions, and charges.

Interested in leasing assets for your business?

We can help businesses to by obtaining the best funding options and facilities, quickly and efficiently, whilst ensuring your short-term goals and long-term ambitions are considered in your financial strategy. 

If you are interested in leasing assets for your business, get in touch with us today. We will assess your business’ individual circumstances and work with you to decide which, if any, finance solution would be the right choice.

Complete the form below to send us an enquiry.

Introducing Bluestone: Toni McLeod

Regional Account Manager, North East of England and Scotland 

‘I really enjoy the variety of my job – getting to meet businesses from a variety of different industries and seeing what the right finance solution can help them achieve. I look forward to developing relationships with the organisations in my region, helping them to boost their growth strategy through tailored finance solutions.’

Toni joined the Bluestone Leasing team in 2022 with 8 years of experience in the commercial leasing sector industry behind her. Covering the North East of England and Scotland, Toni helps businesses in her region, in any sector, to grow either by financing their own assets or enabling them to offer finance to their customers. 

Although a comparatively recent addition to the team, Toni has settled in quickly with her positive approach, hardworking attitude and plenty of experience in commercial finance.

The early days

Toni was born in Fife in Scotland, but when she was 7 years old her family moved to Cramlington in the north east of England which is where she has been based ever since. 

‘I was one of five children and spent a lot of my time irritating my siblings, but I also played a lot of sports including athletics, running, and I played on the school netball team. This taught me a lot about teamwork. The person I most admire is my mum – she raised five children and I have no idea how she did it! She always taught me to treat others how I would want to be treated.’

The world of work   

Toni remembers an early ambition of wanting to be a bin collector – ‘It probably had something to do with wanting to help keep things clean and tidy’ – but her first paid job was washing dishes in a local pub at the age of 13. Over time she moved on to waitressing before eventually working behind the bar when she was old enough and then leaving home for university.

‘While at university in Leeds I worked in customer service for Asda, and then after I graduated I went travelling round south east Asia. In fact, if I could be anywhere in the world right now I would be in Thailand – I have some wonderful memories from the time I spent there.’

After university Toni started work in the commercial finance sector; she now has more than 8 years of experience with particular experience in fire and security related assets. 

Bluestone and the future

‘I could tell from my interview with Bluestone that it is an ethical and moral company. From my first conversation with the managers and team members it was clear that ethical practices were not just a slogan, but an intrinsic part of the operation. They strive for excellence and I am proud to be joining the team.’

When it comes to her free time Toni has a young daughter who she loves to spend time with, her pet peeves are whistling and people who are dishonest, and she is surprisingly good at training dogs! 

In terms of making plans for the future, Toni would love to take a road trip through America, if she could change one thing about the world, it would be inequality, and she would like to be remembered as a decent, supportive, positive person who made the most of life. 

If you would like to find out if Toni could help your business to grow through a bespoke asset finance solution, get in touch today: toni.mcleod@bluestoneleasing.com.

What is a Corporation Tax Loan? Key Features and Benefits

What is a Corporation Tax Loan? Key Features and Benefits

Every business has to ensure that they pay their tax bill on time, but often this can arrive at an inconvenient time. Given the current economic climate, many businesses may find that making monthly payments over a fixed term provides them with a vital cash injection, giving them a competitive edge by allowing existing funds to be used elsewhere within your organisation. In some cases, the business may also benefit from interest tax relief on the facility.

Read on to discover more about corporation tax loans.  

What is corporation tax?

In simple terms, corporation tax is a direct tax that businesses must pay as soon as they start making a profit and then on an annual basis thereafter. 

The corporation tax rate is set by the government. In 2022, the main rate on all profits (except ring fence profits which are subject to different rates) are subject to a flat rate of 19%. The amount of Corporation Tax a business is required to pay is calculated as a percentage of that business’ taxable profits. It is not enough to simply look at net profit, there are several tax-adjusted trading profits that must be calculated to pay corporation tax.

All limited companies must pay Corporation Tax annually. Both small and large companies are required to pay a flat rate of 19%, but within the thresholds of company size, a system of ‘marginal reliefs’ exist which can reduce the amount of Corporation Tax your business ends up paying. These include:

  • Creative Industry
  • Research & Development
  • The Patent Box
  • Disincorporation Relief
  • Marginal Relief
  • Terminal, capital, property income losses and trading losses

Visit the government website for the latest corporation tax rates and more guidance on calculating your corporation tax. 

When should corporation tax be paid?

Unlike self assessment tax bills, corporation tax is not due at the same time for all businesses. Corporation tax is both calculated and paid annually around your ‘corporation tax accounting period’, typically around the same time as your business’ financial year. 

For this reason, businesses are not sent bills for corporation but are required to: 

1. Register for corporation tax within 3 months of your business starting to trade (dormant companies are not required to register)

2. Maintain accurate accounting records and prepare a Company Tax Return which will help you work out how much Corporation Tax to pay

3. Pay your Corporation Tax by the deadline (nine months and one day following your accounting period from your previous financial year)

4. File your Company Tax Return before the deadline (12 months after the end of the accounting period covered).

If your period exceeds 12 months for financial statement purposes, two tax returns are required to be submitted.

How is corporation tax paid?

There are several options of methods for payment, but businesses must ensure they allow time for the payment to reach HMRC before the deadline. Options include CHAPS, online banking, telephone banking, direct debit, and BACS. Depending on the method of payment you choose, payments could arrive on the same day as they are sent or could take up to 5 working days. 

What if you can’t afford to pay your corporation tax bill?

Failing to pay your corporation tax bill on time can carry serious penalties. Charges begin from the day your payment is late, and interest accrues over time, putting you in a worse financial situation, so it is essential to meet payment deadlines. Continued late payment of corporation tax can result in HMRC taking further action, in the worst-case petitioning for the compulsory closure of your business.

If you are unable to pay your tax bill or there is a chance that you will need to pay after your deadline, you need to contact HMRC as soon as possible. In some cases, HMRC may be able to offer you a payment plan referred to as a Time To Pay arrangement (TTP). This enables some businesses to pay back the tax they owe in instalments. However, TTP is intended as a one-off payment plan to allow extra support, but continuous late payments are likely to result in HMRC asking you to pay the outstanding amount in full.

In order to be eligible for the TTP payment plan, businesses must: 

  • Have no extra HMRC payment plans set up
  • Have no other tax debts outstanding
  • Owe less than £10,000.

Alternatively, businesses might consider taking out a corporation tax loan. 

Why consider a corporation tax loan? 

Using a commercial loan to pay corporation tax bills to reduce the impact of costly late payment fines can be a cost-effective way to utilise cashflow and resources. A corporation tax loan will incur interest, but it enables the business to spread their bill over 6 to 12 months through fixed monthly or quarterly payments. The loan can be secured or unsecured. 

The most common reasons for using a corporation tax bill include: 

  • Spreading the cost of a tax bill, retaining capital and therefore spending power, which in turn can allow for increased competitiveness, growth and expansion.
  • Maintaining a stable and fluid cash flow so they can take advantage of new opportunities and/or fund unexpected costs or drops in income. 
  • Avoiding the risk of high penalties from HMRC for late or non-payments. 

IMPORTANT: Taking out any commercial loan should be approached with caution as if your business’ finances are not in a healthy condition, there is a risk of getting into more debt.

Interested in a corporation tax loan for your business?

We can help businesses like yours to obtain the best funding options and facilities, quickly and efficiently, whilst ensuring their short-term goals and long-term ambitions are considered in their financial strategy.

If you are interested in spreading the cost of your corporation tax bill over time to retain capital and enable you to manage your budget more effectively, get in touch with us today.

We will assess your business’ individual circumstances and work with you to decide if a corporation tax loan or another finance solution would be the right choice.

Complete the form below to send us an enquiry.

Bluestone’s Q3 Market Update by Richard Tamlyn 2022

VIDEO TRANSCRIPT

Hi, I’m Richard Tamlyn and this is Bluestone’s Q3 market update for 2022.

The last couple of years have seen more changes to the commercial finance market than at any time previously; it’s a big ask for UK businesses to stay up to date with the opportunities and ensure they’re making the best financial strategy decisions to maximise the benefits available.

Here at Bluestone we’ve been working with our clients to make sure they’re utilising the most effective options for their business; maximising tax savings, capitalising on deferred repayment options and accessing the most appropriate finance solutions for their needs.

Whilst the cost of living crisis and fuel bills are impacting businesses as well as the general public, it’s not all bad news for companies and their finances. The chancellor has committed to reform and cut investment taxes for UK corporations, with announcements expected in the August budget statement. It’s expected to include a permanent increase to the Annual Investment Allowance, an increase to the rates of writing down allowances, and an introduction of a General First Year Allowance for qualifying expenditure on plant and machinery. The government invited businesses to feed in to the decision-making process by submitting their views on the gov.uk website – you can search “Potential Reforms to UKs Capital Allowance regime” on the gov.uk site for more information.

In the meantime, the chancellor announced in October that the temporary Annual Investment Allowance would remain at the increased rate of £1m per annum (up from £200k) until 31st March 2023. In addition, the super-deduction tax, which enables companies to offset 130% of the value of qualifying assets against their corporation tax bill, has also been extended to 31st March 2023. Both of those provide big incentives to UK businesses to make any planned investments in the coming 9 months.

So what does that mean for finance? Well firstly there’s been a lot of press coverage of the 5 consecutive increases in the Bank of England base rate as the UK attempts to tackle the soaring inflation levels. It’s expected they’ll continue rising with most commentators anticipating the current 1.25% to reach 3% by year end.

Whilst that doesn’t sound great, it’s important to remember that we’ve been spoilt in the last decade with unprecedented low levels of interest making money as cheap as it’s ever been. If we go back 15 years to just before the financial crisis rates were between 5% and 6%, and if we go back 30 years they were over 10%. So in relative terms, the current 1.25%, and even at the forecast 3%, money is still very affordable.

We often talk to businesses about Net Present Value. In its simplest terms, NPV is the value of money today, compared to the value of the same amount, at a future point in time. When inflation is high, such as the double digit inflation we’re seeing at the moment, net present value becomes a more important consideration. So £100 today, if we continue to see 10% inflation for the next 5 years, might only be worth £62 in real terms by 2027. So if you spread the cost of your investment over 5 years, the true value of your repayments, and therefore the real cost you end up paying, will be significantly lower in times of high inflation.

So a fixed finance repayment of £100 a month secured now, might only cost you £62 a month by 2027 in real terms monetary value. That’s a huge saving of up to 38% on your repayments and well worth considering if you believe inflation is going to remain high.

When you spread the cost of those investments in line with the return on investment you might see in your business, add in the tax breaks, and consider NPV, utilising finance makes more sense than ever when making purchases in the most cost-efficient way for your business.

And what have we seen in terms of sectors we’re providing finance for?

Well the move to home working and the death of the office seems to have been massively overstated. The office fit-out market has bounced back strongly post-pandemic and we’re seeing huge growth across the sector. Much of it is businesses re-designing their offices to accommodate a more hybrid working pattern, but after a couple of years of subdued market there seems to be a huge pent up demand that’s now coming to fruition. Whilst a great working environment has a huge impact on productivity, staff well-being and engagement, it doesn’t offer a direct return on investment so financing this (often costly investment) makes enormous sense. We are the market leaders in this sector and work with most of the biggest and best suppliers in the UK, so please get in touch for some no obligation advice on how to most effectively finance your fit-out project.

The IT sector has certainly seen some challenges throughout Covid and Brexit. The rush to equip teams for home working and remote access to phone systems has saturated the market and created significant supply issues for new hardware, particularly micro-chips. With more businesses moving to cloud based systems demand for servers and software is declining with big growth in software as a service or subscription solutions.

This has led to more demand for refurbished and re-manufactured hardware which we’re also able to finance. Recently we’ve secured finance for refurbished laptops, copiers and desktop PCs so it could well be a consideration for your business if you’re finding hardware difficult to source.

We work with some of the UKs major re-sellers so if you’re just looking for finance or want an introduction to people who have hardware available now, give us a call.

The fuel crisis is impacting businesses in many ways – both by needing to increase wages to maintain employees standard of living, and tackling the increased costs of running their offices and mobilising their fleets. For many that can cause cashflow problems.

Whilst The Recovery Loan Scheme, created to help businesses transition out of Covid, ended on 30th June, there are many other solutions to help businesses manage short-term cashflow challenges, such as loans or invoice finance. We work with multiple funders with varying solutions and can find the right fit for your business if that could help.

Alternatively, many businesses are tackling the problem head on by using finance to help them become greener and less dependent on expensive fossil fuels to power their offices and fleets. Solar panels, electric vehicles, LED lighting, all contribute to becoming a greener business, reducing your fuel costs, and running a more self-sufficient business, less reliant on expensive fuel.

Off-setting the costs of finance against the energy savings you’ll make means you could make the change to become a greener business at a net neutral cost, and in some cases you could see a cash generative outcome. We have calculators and models we can apply to your business to show the potential savings available and how they could offset against the finance costs so you can see the possible impact on your company’s bottom line.

Our team across the country are working on more and more diverse projects, providing finance for farm equipment, agri-tech and vertical farming, education funding, security systems and green energy in addition to our traditional sectors. Our vehicle division has been growing and doing more Electric vehicles and fleet packages. Whatever your business is investing in, we can offer a no obligation quote so don’t wait to get in touch.

And speaking of education funding – the IFRS16 regulations were meant to apply to all schools and MATs from 1st April 2022. The regulations would have meant schools could now enter in to finance leases rather than just operating leases. Due to Covid, CIPFA (the Chartered Institute of Public Finance and Accountancy) conducted an emergency consultation and submitted their findings to the Treasury’s Financial Accounting Advisory Board.

The upshot is all Multi-Academy Trusts will now adopt IFRS16 accounting standards from 1st September 2022.

All LEA schools will adopt them from 1st April 2024 but LEAs do have the option of adopting them earlier should they choose to do so. Once transitioned MATs and schools will be able to take out finance leases for qualifying assets, such as IT hardware, gym and catering equipment or minibuses, without the Secretary of States prior approval. We’ve worked with schools on multiple projects over the last decade from 1-2-1 devices to coaches and AstroTurf hockey pitches. We are very happy to work with your finance team to advise how the changes can be used to help your school or MAT make the transition.

The Bluestone Difference

At Bluestone we’re proud to be different in the broker world. Our focus is providing finance solutions for our introducing partners, and working with our customers over the long term to help them achieve their growth goals and ambitions. Whilst we can provide a quick transactional solution, we aim to always consult, listen and understand a business’ unique requirements so we can recommend the most appropriate products that enable our clients to maximise their financial opportunity in every purchase and investment they make. Our ongoing relationships enable us to  revise and adapt those solutions as companies develop, be that helping them navigate challenging periods or accelerating growth plans in the most cost-efficient ways.

We’re delighted that difference has been recognised in the Business MoneyFacts Awards 2022 where we again won the Award for Finance Broker of the Year. The Business Moneyfacts Awards are the largest business and commercial finance awards in the UK and judged independently by the business community so we’re delighted our work in supporting UK businesses through the pandemic and beyond has been acknowledged. We have account managers across the UK ready to support your business so please don’t hesitate to get in touch and we’ll connect you with our account manager in your region.

The changes keep coming, but the whole team here at Bluestone are looking forward to helping UK businesses grow and navigate the ever-changing financial markets.  

And to finish on a lighter note, we took some time out to get the team together at the Urban Playground in Manchester last month to take on the Cube Live Experience and play some mini-golf. We’ve loved being able to get the team together this year and celebrate the work they do across the country. Bluestone is all about our people and we value the contribution all of them make to help support UK business. Everyone had a fantastic time and really appreciated the chance to get together with colleagues from further afield and enjoy some food and fun away from the office.

That’s all from me. Please leave a message below or get in touch through our website if you’d like more information on any of the topics covered.

Thanks for your time, I look forward to seeing you soon.