Hire Purchase

Traditional form of funding with a minimum deposit and fixed monthly payments.
Ownership title passed on completion of the agreement.
Monthly payments do not attract VAT.
On balance sheet for the business user.
Capital cost can be written down for tax purposes on a reducing balance up to £3000.00 against taxable profits per annum.
Interest (usually without limit) is also allowable against taxable profits but may be restricted for private use.

Lease Purchase

Funding option with a minimum deposit or upfront instalment and fixed monthly payments.
The agreement can carry a final payment called the balloon or residual which reduces the monthly payment during the agreement.
Ownership title passed on completion of the agreement.
Monthly payments do not attract VAT.
On balance sheet for the business user.
Capital cost can be written down for tax purposes on a reducing balance up to £3000.00 against taxable profits per annum.
Interest (usually without limit) is also allowable against taxable profits but may be restricted for private use.

A variation on the hire purchase theme with a minimum deposit and fixed monthly payments.
The agreement carries a final payment called a guaranteed future value which reduces the monthly payment during the agreement.
Three options are available at the end of the agreement term, return the vehicle back to the finance company with nothing further to pay, part exchange the vehicle at a dealership or pay the guaranteed future value and keep the vehicle.
Ownership title passed at the end of the agreement if the guaranteed future value is paid.
Monthly payment figures and guaranteed future values are based on agreement period and annual mileage.
Monthly payments do not attract VAT.
On balance sheet for the business user.
Capital cost can be written down for tax purposes on a reducing balance up to £3000.00 against taxable profits per annum.
Interest (usually without limit) is also allowable against taxable profits but may be restricted for private use.

Funding option with a minimum deposit or upfront instalment and fixed monthly payments.
The agreement can carry a final payment called the balloon or residual which reduces the monthly payment during the agreement.
A percentage of the sale proceeds are returned after the vehicle has been sold, usually 95%.
Ownership title retained by the finance company.
Off balance sheet for the business user.
Monthly payments attract VAT.
50% of VAT on monthly payments reclaimable as long as the user is VAT registered.
Monthly payments allowable against taxable profits subject to Inland Revenue guidelines.

Funding option with a minimum deposit or upfront instalment and fixed monthly payments.
Typically these agreements include all running costs i.e. servicing, tyres, road tax and replacement vehicle.
Monthly payment figures are based on agreement period and annual mileage.
Ownership title retained by the finance company.
Off balance sheet for the business user.
Monthly payments attract VAT.
50% of VAT on monthly payments reclaimable as long as the user is VAT registered.
Monthly payments allowable against taxable profits subject to Inland Revenue guidelines.