What is a finance lease?

A finance lease is a type of commercial lease in which the legal owner of the asset — in this case, a tractor — rents the asset to the user of the tractor for an agreed-upon period. When a lessee enters into this agreement, they have full operating control of the asset. They will have responsibility and assume the risks and rewards that come with owning the asset. For accounting purposes, the lease gives the lessee the same economic characteristics as if they had full ownership of the tractor. The lessee will record the asset as a fixed asset on their balance sheet. In this situation, the lessee will record the interest of the lease payment as an expense. The lesser charges rent in exchange for lending the asset. The lessor retains ownership of the asset but the lessee gains exclusive use of the asset (providing they abide by the terms of the lease). The lessee is obliged to make rental payments that cover the original cost of the asset. There is an obligation to pay all of the fixed rental amounts, sometimes including a percentage of the purchase price of the vehicle at the end of the contract.

What is an operating lease?

An operating lease in contrast is the simplest form of equipment leasing, where the customer doesn't take on the risks and rewards that come with owning the asset (such as maintenance costs). An operating lease or contract hire is a way of renting an asset for your business over a short or medium time frame without taking on any risk. With an operating lease, you can get a tractor hire over a fixed term, with lower monthly payments and without the commitment of ownership.

News

Chancellor sets out ambitious plans to boost UK Fintechs

18 Apr 2021

The Chancellor has announced today, 19 April 2021, ambitious new plans to help fintechs scale up and ensure the UK remains at the cutting edge of digitalising finance.

Table of contents

Supporting growing firms and Fintechs across the UK
Pushing the boundaries of digital finance

UK Fintech Week (Monday 19th – Friday 23rd April) kicked off today with the Chancellor Rishi Sunak setting out his proposals to enhance the UK’s advantage in Fintech which include both regulatory support and reforms to help UK Fintechs grow and the announcement of new taskforce to lead the UK’s work on a central bank digital currency.

Following on from the Kalifa Review in February, the Chancellor confirmed the UK will be taking forward many of the recommendations outlined by Ron Kalifa.

The Chancellor Rishi Sunak said:

Our vision is for a more open, greener, and more technologically advanced financial services sector. The UK is already known for being at the forefront of innovation, but we need to go further. The steps I’ve outlined today, to boost growing Fiintechs, push the boundaries of digital finance and make our financial markets more efficient, will propel us forward. And if we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre.

Supporting growing firms and Fintechs across the UK

To support Fintechs in scaling up, the FCA will take forward a ‘scale box’, a package of measures to enhance its pioneering regulatory sandbox. To date, this has been invaluable for allowing start-ups to test new propositions, and to provide a one-stop shop for growth stage firms.

The FCA will also launch the second phase of its Digital Sandbox to enable firms to test concepts that tackle sustainability and climate change-related challenges, helping to deliver a greener financial sector that supports the transition to net zero.

These initiatives announced today build on announcements made at Budget 2021.

Pushing the boundaries of digital finance

The Chancellor also set out new initiatives to ensure the UK remains at the cutting edge of digitalising financial services which include creating a new taskforce to bring together HM Treasury and the Bank of England with the aim of exploring a possible UK central bank digital currency (CBDC).

The government will set out its detailed response to the Fintech Review in a written statement to Parliament today.

To find out more about what Chancellor Rishi Sunak announced in the Budget 2021 head here.

Courteney Way

Marketing Director

Courteney Way is the Marketing Director at Funding Options, raising the profile of the fast-growth fintech within the ecosystem and building brand awareness as a vital provider of finance solutions to SMEs. For the past ten years, she has worked across UK, European and South African markets and In 2022, she was recognised as part of Women in Fintech Powerlist.

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Chancellor sets out ambitious plans to boost UK Fintechs

Supporting growing firms and Fintechs across the UK

Pushing the boundaries of digital finance

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