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- Hire Purchase is a type of loan that gives the benefits of owning the asset whilst spreading the cost over a fixed period.
- After paying the VAT and the deposit upfront you will pay regular instalments comprising of the capital and the interest.
- At the end of the agreement you have total ownership of the asset.
- It is possible to negotiate a VAT deferral with the lender to further support cash flow.
- Seasonal payments can also be negotiated where appropriate.
Benefits
- Supports cash flow by spreading the cost over several years.
- The asset is shown on your balance sheet.
- VAT can be reclaimed in full.
- The interest charges are allowable against tax.
- Tax writing down allowances are available.
- Helps with budgeting for both cash flow and growth projects.