Free guide to starting a UK plant hire companyUpdated October 2026 · Browse all guides
Plant Hire Start-Up Guide
Startup checklist

Fleet and equipment

Lease, hire purchase or buy outright?

Buying outright, hire purchase or leasing compared for a hire fleet: cash upfront, monthly cost, VAT timing, ownership and tax, with a cash-flow comparison calculator.

Guide specPHSUG-16
Read time6 min
LevelIntermediate
IncludesCalculator
UpdatedOct 2026

Key takeaways

  • Buying outright has no interest but ties up the most cash.
  • Hire purchase spreads the cost; you own the machine at the end; VAT is usually upfront.
  • Leasing spreads VAT across rentals and suits machines you'll replace regularly.
  • Compare cash upfront, monthly cost and total cost, not just the monthly payment.

The three options

Buy outrightHire purchaseFinance lease
Upfront cashFull price + VATDeposit + VATFirst rental(s)
Monthly costNoneFixed instalmentsRentals + VAT
OwnershipYours nowYours after final paymentLender's
Capital allowancesYesUsually yesUsually the lender
Best forSpare cash, cheap machinesMachines you'll keepRegular replacement

Comparison calculator

Cash, HP or lease: cash-flow comparisonCALC-05

Buy outright

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Hire purchase

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Finance lease

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Totals over the term

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A simplified illustration, not a quote. HP shows VAT paid upfront (reclaimable if you're VAT registered); the lease adds VAT to each rental and ignores end-of-term arrangements. Real rates, fees and structures depend on the lender and your business.

VAT and tax

On hire purchase the VAT on the whole machine is usually due at the start, which hits cash flow even if you reclaim it on the next VAT return. Leases charge VAT on each rental. Capital allowances and how interest is treated differ between options; from April 2026 the main writing-down allowance is 14% and a 40% first-year allowance applies to new plant for hire. See sell or replace and ask your accountant.

How to choose

  1. 01

    How long will you keep it?

    Long: HP or buy. Short: lease.

  2. 02

    How much cash do you have?

    Keep a working-capital buffer; see cash flow.

  3. 03

    Are you VAT registered?

    If not, upfront VAT on HP is a real cost.

  4. 04

    What do lenders offer you?

    New businesses may get different terms.

  5. 05

    Compare totals

    Use the calculator and real quotes.

Get real numbers

Compare hire purchase and leasing quotes

Plant Hire Finance, our sister site, introduces you to a specialist broker who can quote hire purchase and leasing for the same machine.

Plant Hire Finance is run by the same team as this guide. It is an introducer, not a lender or broker. Finance is subject to status and available to UK businesses only.

FAQs

Common questions

Is it better to lease or buy plant?
It depends on how long you'll keep the machine, your cash and VAT position. Buying or hire purchase suits machines you'll keep; leasing suits regular replacement and spreads VAT.
Do you pay VAT upfront on hire purchase?
Usually yes, on the full machine price at the start. VAT-registered businesses can reclaim it on their next return.
What's the cheapest way to get a machine?
Buying outright has no interest cost but uses the most cash. Compare total cost and the effect on your cash reserves before deciding.

This guide is general information for people setting up a plant hire business in the UK. It is not legal, tax, insurance or financial advice. Rules and thresholds change, so check current guidance on GOV.UK and take advice from an accountant, solicitor or broker before acting.