Structures explained
Hire Purchase vs Lease vs Refinance
Hire purchase, finance lease and refinance cover almost every asset finance transaction we structure. This guide sets them side by side — how each is treated for tax, VAT and on the balance sheet, and the practical rules of thumb we use to pick between them.
Chapters written from real deals.
Every chapter is drawn from work we've done with UK businesses — anonymised, but the numbers, structures and outcomes are real.
Hire purchase
You own the asset from day one for tax, take AIA or full expensing, and hold title outright at the end of term. Best for kit you intend to keep and depreciate on the balance sheet.
Finance lease
The lender owns the asset, you rent it, and the rentals are fully deductible. VAT sits on each rental rather than the capital cost. Best where cash-flow smoothing matters more than balance-sheet ownership.
Refinance
You release capital from equipment you already own. Fastest, most flexible way to raise working capital when the assets are there but the cash isn't. We show when this beats an overdraft.
Decision framework
A single-page framework covering tax profile, VAT position, expected holding period and balance-sheet appetite. Print it, share it with your accountant.
The traps to avoid
The five mistakes we see most often — mis-classified operating leases, VAT on a used asset refinance, hidden documentation fees, secondary rentals and mis-matched terms.
Written for the people making the decision.
- 01Finance directors and management accountants
- 02Business owners weighing HP vs lease on a specific asset
- 03Accountants advising SME clients on capex
What you'll walk away with.
- 01Side-by-side comparison of HP, finance lease and refinance
- 02Tax treatment: AIA vs deductible rentals, and when each wins
- 03VAT treatment across the three structures
- 04When refinance releases capital more efficiently than an overdraft
Other guides you might find useful.
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