Specialist
Railway Finance
For purchasing and refinancing trains, railway equipment, parts and infrastructure for railway companies in the UK
For purchasing and refinancing trains, railway equipment, parts and infrastructure for railway companies in the UK
In this article, we will explore the world of railway finance, delving into the various options available for acquiring and maintaining railway assets and operations in the UK. From rolling stock to infrastructure, we'll provide an overview of the key areas that typically require financing, popular models and manufacturers, and the associated costs.
Additionally, we'll cover topics such as tax implications, maintenance, and insurance considerations, as well as the role of finance brokers in securing the best deals. Remember, investing in railway infrastructure and assets can be a significant undertaking, and with the right finance plan, it becomes more attainable than you might think.
Railway finance covers a broad range of assets and activities. Here are some key areas that can typically be financed:
Rolling Stock: This includes the trains themselves, which can be passenger trains, freight trains, or specialised trains. Financing can be used for the purchase, lease, or maintenance of these assets.
Infrastructure: This includes the physical assets necessary for the operation of the railway, such as tracks, signals, bridges, tunnels, and stations. Financing can be used for the construction, upgrade, or maintenance of these assets.
Land and Property: Rail companies often own land and property, such as stations and rail yards. Financing can be used for the purchase, development, or improvement of these properties.
Equipment and Technology: This includes the various equipment and technology used in the operation of the railway, such as signaling systems, communication equipment, and information technology systems.
Project Development: This includes the costs associated with planning and developing new railway projects. This can involve feasibility studies, design work, environmental assessments, and other pre-construction activities.
Operational Costs: These are the day-to-day costs of running the railway, such as staff wages, fuel costs, and routine maintenance.
The UK rail industry offers a wide range of rolling stock models suitable for various applications, including passenger transportation, freight operations, and specialized services. Here are some examples of popular rolling stock models and their approximate price ranges:
| Rolling Stock Type | Model | Manufacturer | Price Range in UK |
|---|---|---|---|
| Passenger Trains | Aventra | Bombardier | £2.5 million - £4 million |
| AT300 | Hitachi | £3 million - £5 million | |
| FLIRT | Stadler | £2 million - £3.5 million | |
| Freight Locomotives | EuroLight | Vossloh | £1.5 million - £2.5 million |
| EuroDual | Stadler | £2 million - £3.5 million | |
| 7E | Škoda | £1 million - £2 million | |
| Specialised Trains | Track Renewal Trains | Network Rail | £5 million - £15 million |
| Vacuum Waste Disposal Trains | Various | £2 million - £5 million | |
| Snowblower Trains | Various | £3 million - £7 million |
Railway finance in the UK is a complex system involving various sources of income and expenditure. The primary sources of income can be diverse within a company, and these income streams can help a lender determine whether your company is suitable for railway finance. Here’s an overview:
A broker can help navigate these income sources when securing railway finance. They can assist in presenting a strong business case to lenders, highlighting the diverse and reliable income streams of the rail industry. At Clifton Private Finance, we can help negotiate favourable terms based on these income sources, potentially securing better interest rates or repayment terms.
The UK rail industry can be prohibitively expensive, with various areas of expenditure. These include:
The Office of Rail and Road (ORR) publishes annual reports detailing the income, expenditure, and government funding of the UK rail industry. These reports provide a comprehensive view of the financial state of the UK rail industry.
When it comes to railway finance in the UK, understanding the tax implications is crucial. The type of finance or lease agreement you choose can have a significant impact on your tax liabilities.
For instance, if you opt for a rolling stock lease, you may be able to reclaim a portion or all of the VAT on your monthly payments if your company is VAT-registered. The amount you can claim depends on the extent of private use of the rolling stock, if any. If the trains are used solely for business purposes, you can typically claim up to 100% VAT back on the initial rental and monthly instalments.
In terms of corporation tax, limited companies can often claim a significant portion or all of the monthly payments back through their corporation tax bill. This also applies to costs such as maintenance packages alongside your lease agreement. However, the specific allowances and deductions are determined by HMRC (HM Revenue and Customs) and may vary based on factors like the rolling stock's emissions and energy efficiency.
The responsibility for maintenance and insurance of financed or leased railway assets typically depends on the type of agreement you choose.
In a contract hire arrangement, all maintenance and wear and tear are usually the responsibility of the lender or lessor. This means that the finance company takes care of servicing and maintaining the rolling stock or infrastructure, providing you with peace of mind and predictable costs.
On the other hand, with a finance lease or hire purchase agreement, you may be responsible for the maintenance costs yourself. This means you would need to ensure that the assets are serviced and repaired as necessary, either through your own resources or by contracting with a third-party maintenance provider.
When it comes to insurance, it is typically the responsibility of the lessee or owner to ensure that the railway assets are adequately insured. The insurance policy must cover the assets and any potential liabilities associated with their operation.
Typically, at the end of a railway finance agreement, you'll have three main options:
Return: Hand back the assets (e.g., rolling stock, equipment) and walk away. No further payments or fees are required. This option is suitable if you only needed short-term use of the assets.
Upgrade: Use any equity or residual value to secure new assets on a fresh finance plan. This is a convenient option if you want to upgrade to the latest technology or models.
Buy Outright: Pay the pre-agreed residual value ('balloon') to purchase the assets outright. This is an ideal choice if you would like long-term ownership and continued use of the assets.
It's essential to consider your business needs, the condition of the assets, and the associated costs to determine the best option for you. Discuss your requirements with your finance provider well in advance of the end of the agreement to ensure a smooth transition.
Finding the best deal for railway finance and leasing can be a complex and daunting task, especially if you are not familiar with the different options, terms, and conditions. That's why using a finance broker can be incredibly beneficial. At Clifton Private Finance, we can help you:
Compare different lenders and products: We have access to a wide range of lenders and products, and we can find the ones that suit your needs and preferences. We'll help negotiate better rates and terms on your behalf, saving you time and money.
Advise you on the best option: Our team can explain the pros and cons of each option and help you make an informed decision. We'll answer any questions you might have and guide you through the application process.
Handle the paperwork and administration: We'll handle the paperwork and administration involved in securing your railway finance or leasing. We liaise with lenders, the manufacturers or suppliers, and the insurers, ensuring a smooth and hassle-free transaction.
At Clifton Private Finance, we are a leading finance broker in the UK, and we specialise in railway finance and leasing. We have access to multiple asset finance lenders, and we always compare the best options to offer you bespoke finance solutions that suit your needs and budget.
If you are interested in acquiring railway assets or financing railway operations through finance or leasing, contact us today and speak to one of our expert advisers. We will be happy to answer any questions you may have and provide you with a free, no-obligation quote. We look forward to hearing from you soon.
Call us today to discuss your railway finance and leasing requirements on 0203 900 4322.
I approached Clifton Private Finance to help me get a mortgage as an Expat working in the Far East. I would normally 'cut out the middle man' on something like this and try to get myself a deal directly with the banks, but I am now sold on the broker concept and wouldn't hesitate to use Clifton Private Finance again. There were a number of complicating factors such as being an expat, the stamp duty holiday, the sheer amount I wanted to borrow and the fact I wanted it all wrapped up before the Stamp Duty holiday ended. It is clear to me now that the relationship that brokers have managed to foster with their banks means they can simply pull levers and make stuff happen that us ordinary folk cannot. Put simply, they are worth every penny, will take most of the stress out of the lending process, and seem to have access to deals that you just won't find on the internet. Thank you George and Jan for all your hard work!
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