How different are lease finance and hire purchase agreements?

With a hire purchase agreement, the borrower pays the VAT and a deposit upfront, though these can be financed. With lease finance there is no deposit, and the VAT is spread across each payment.

With hire purchase the payments cannot be deducted from corporation tax but it may be possible to claim depreciation and Annual Investment Allowances. With lease finance, the entire monthly payment can usually be deducted company profits before corporation tax is calculated.

With hire purchase, the borrower has a guaranteed right to buy the title of the asset they have financed, which will normally be for a nominal administration fee. At the end of a lease finance agreement, the borrower can give back, continue leasing or buy the asset.