What is Sale and Leaseback?
Sale and leaseback is a financing technique where you sell commercial vehicles you already own outright to a finance company, who pays you their market value. You then immediately lease the vehicles back from that company, continuing to operate them as normal. The result: you convert the equity tied up in owned assets into cash, while retaining operational use of those assets.
When Does Sale and Leaseback Make Sense?
It works best when: your fleet has significant equity but your business needs working capital; you want to free up cash for a growth opportunity without taking on a traditional business loan; your bank facilities are fully drawn; or you want to optimise your balance sheet before a refinancing or sale of the business.
How Much Can You Release?
Lenders typically advance 70–80% of the current market value of the vehicle. A fleet of lorries worth £500,000 might release £350,000–£400,000 in cash. The precise amount depends on the vehicles' age, condition, mileage and market demand.
| Vehicle Type | Typical LTV | Notes |
|---|---|---|
| New / nearly-new HGVs | 75–80% | Strong residual values support higher LTV |
| Used HGVs (3–7 years) | 65–75% | Condition and mileage assessed |
| Older HGVs (7+ years) | 50–65% | Specialist lenders only |
| Vans and LCVs | 70–80% | Strong market for used vans |
Tax Implications
If you sell vehicles at a profit over their tax written-down value, a balancing charge may arise, increasing your tax liability. If sold below the written-down value, a balancing allowance gives additional relief. Your accountant should model the tax impact before completing a leaseback transaction. Also note: the leaseback rental is deductible as an operating expense.
Finding a Leaseback Lender
Not all commercial vehicle lenders offer sale-and-leaseback. Close Brothers, Aldermore, United Trust Bank and some specialist asset finance houses have active leaseback programmes. A broker like Doulton Bridging Finance can identify the most competitive lender for your specific fleet profile and business financials.