Hire Purchase

 

Hire Purchase provides the benefits of ownership without incurring the full capital outlay at the outset. Payments are agreed in advance and fixed for the life of the agreement.

 

The full VAT, or the VAT difference, if a part exchange is included, is normally payable on signing the agreement but can be reclaimed in the normal way since the finance agreement is acceptable as a VAT invoice.

 

Titls passes at the end of the agreement when the payments are complete and the option to purchase exercised. However, because the intention to purchase exists from the outset, capital tax allowances and the other available relief can be claimed from the point the equipment is brought into use.

 

The machine must be comprehensively insured by the purchaser.

 

Benefits :

	Fixed cost and fixed repayments support confident budgeting.
	The asset appears on the balance sheet of the business.
	VAT reclaimable in full at the outset if the business is VAT registered.
	Capital ( tax ) allowances are available from the outset and interest can normally be offset as a business expense.