Asset Finance Cost Calculator 2025/26

In hire purchase (HP), you own the asset outright after the final payment — legal title transfers to you. In a finance lease, the leasing company retains legal ownership throughout and at the end of the term; you either return the asset, extend the lease, or sell it and share the proceeds. HP suits businesses that want to own their assets long-term; finance leases suit those who want to use an asset without the ownership risk (e.g. technology that becomes obsolete).

HP: you can claim 100% Annual Investment Allowance (AIA) in the year of purchase on qualifying plant and machinery — this gives immediate tax relief on the full asset cost up to the £1 million AIA limit. Finance lease: monthly lease payments are 100% deductible against trading profit as operating expenses. Operating lease: treated as an operating expense, fully deductible. The AIA advantage of HP means the effective cost of HP finance is often lower than the headline rate suggests after tax relief.

Common UK asset finance uses include: vehicles (cars, vans, HGVs, plant vehicles); manufacturing and production machinery; agricultural machinery (tractors, harvesters); IT and technology equipment; commercial kitchen and catering equipment; medical and dental equipment; and renewable energy installations. Lenders typically require assets to have a meaningful residual value and useful life that matches or exceeds the finance term.