When it comes to acquiring new assets, one of the key questions that many businesses face is whether to purchase or lease.

The answer is usually dependant on the company’s attitude to ownership, with many business owners preferring to lease assets and remove any liability of owning them outright. Such a decision also eliminates the need for a significant upfront capital investment, which can hit cash flow hard.

Hire Purchase agreements are a far more cost-effective alternative that enable the purchase of expensive equipment and machinery. Just like buying a car on finance, the item remains the property of the lender until the final repayment is made, which can include a one-off option-to-purchase fee and thus transferring ownership to your business.

With Hire Purchase solutions, you can spread the cost through fixed monthly repayments, which also take into account any seasonal fluctuations. This enables firms to budget and forecast effectively. In addition, repayments aren’t subject to VAT and charges can be offset against profits for taxation.

Hire Purchase is ideal for a range of assets including vehicles and manufacturing equipment and enables businesses to replace old, defunct items or expand their service offering with the latest technology.

Asset purchases made this way may also benefit from tax savings generated via the Annual Investment Allowance (AIA). The AIA threshold currently stands at £500,000, meaning businesses can claim 100 per cent tax relief on qualifying expenditure up to this amount. Firms can also claim the allowance for the current tax year, regardless of whether repayments are spread over a number of years.

Unlike other lenders, Praetura Asset Finance takes individual business needs into consideration to ensure the funding agreement matches exact cash flow requirements.


If Hire Purchase sounds like the smarter solution to finance your business assets, contact us today on 0333 343 7800.