Asset Finance Guide

Asset Finance UK 2025: Complete Guide

Finance equipment, vehicles, and machinery for your UK business. Hire purchase, leasing, and finance lease explained with rates, tax benefits, and approval criteria for your business growth.

£1k-£5m
Funding range
4-9%
APR range
70-85%
Approval rate
£37bn
UK market 2024

What is Asset Finance?

Asset finance lets you acquire business assets without paying full cost upfront. The equipment itself serves as security, making approval easier than unsecured loans. £37 billion in UK asset finance in 2024 (Finance & Leasing Association).

What You Can Finance

Commercial vehicles

Vans, trucks, fleet vehicles

£5,000-£100,000

Machinery & equipment

Manufacturing, construction, printing

£3,000-£5,000,000

IT & computers

Servers, workstations, software

£1,000-£500,000

Catering equipment

Ovens, fridges, kitchen fit-outs

£2,000-£150,000

Medical equipment

Diagnostic, dental, physiotherapy

£5,000-£500,000

Agriculture

Tractors, harvesters, farm equipment

£10,000-£1,000,000

3 Types of Asset Finance

1

Hire Purchase (HP)

Most Popular

MOST POPULAR

How it works:

  • Pay 10-30% deposit upfront
  • Make fixed monthly payments (12-60 months)
  • You OWN the asset at the end (small option-to-purchase fee £50-£100)

Typical rates:

New assets: 5-9% APR

Used assets: 7-12% APR

Deposits: 10-30% of asset value

Tax benefits:

  • Claim capital allowances (write-down value)
  • AIA (Annual Investment Allowance) - deduct 100% in year 1 on assets up to £1,000,000
  • Interest payments are business expense
Best for:

Businesses wanting to own assets, vehicles, equipment you will keep 5+ years

2

Finance Lease

Tax Efficient

How it works:

  • Lease equipment for fixed term (2-7 years)
  • Make regular payments
  • Never own it - Return, upgrade, or extend lease at end

Typical rates:

APR: 4-8% (lower than HP because no ownership)

Deposits: 0-20% (often lower than HP)

Tax benefits:

  • 100% of payments are tax-deductible as operating expense
  • Asset stays off your balance sheet
  • VAT reclaim on payments (if VAT registered)
Best for:

Assets that depreciate quickly (IT, vehicles), businesses wanting latest technology, cash flow optimization

3

Operating Lease

Keep Assets Off Balance Sheet

How it works:

  • Short-term rental (typically 1-3 years)
  • Regular payments
  • Return equipment at end

Typical rates:

APR: Similar to finance lease (4-8% APR equivalent)

Best for:

Short-term needs, testing equipment, avoiding obsolescence risk

Cost Comparison: Real Example

£30,000 Van Over 4 Years

Cash Purchase

Upfront: £30,000

Interest cost: £0

Total cost: £30,000

Cash flow impact: -£30,000 immediately

Hire Purchase (7% APR)

Deposit: £6,000 (20%)

Monthly: £574 × 48 months

Total cost: £33,552

£3,552 vs cash

You OWN the van at end

Finance Lease (5% APR)

Deposit: £0-£3,000 (0-10%)

Monthly: £625 × 48 months

Total cost: £30,000 (you never own it)

Tax deduction: 100% of payments, Return van at end, upgrade to new

Approval Rates & Requirements

Asset finance has 70-85% approval rates (higher than unsecured loans) because the equipment provides security.

Minimum 6-12 months trading (some accept pre-start with strong plan)
UK business bank account
Credit check (less stringent than unsecured loans)
Proof of need for equipment
10-30% deposit (varies by asset type and credit)

What Gets Approved Easily vs Difficult

Easy Approval (85%+ rates)

Commercial vehicles: Vans, trucks (high resale value)
Standard equipment: Common machinery with ready market
IT equipment: Brand-name computers, servers
New assets: Direct from manufacturer/dealer

Harder Approval (60-70% rates)

Specialized equipment: Limited resale market
Used/older assets: Higher depreciation risk
Custom/bespoke equipment: Hard to repossess and resell
Intangible assets: Software, licenses (some lenders decline)

Tax Benefits Explained

Annual Investment Allowance (AIA)

Description

Deduct 100% of asset cost in first year

Allowance

Up to £1,000,000 per year (confirmed until March 2026)

Saving

Corporation tax saving: 19-25% of asset value

Example: £50,000 equipment purchase via HP

Claim:

Claim £50,000 capital allowance in year 1

Tax Saving:

Corporation tax saving: £50,000 × 19% = £9,500

Effective Cost:

Effective cost after tax: £40,500

Best Asset Finance Providers UK (2025)

Aldermore

£5k-£500k - Vehicles and equipment

6-10% APR

Close Brothers

£10k-£5m - Specialist equipment

5-9% APR

Lombard (RBS)

£3k-£1m - Commercial vehicles

6-11% APR

Hitachi Capital

Varies - IT equipment specialist

5-8% APR

Investec

£100k+ - High-value assets

4-7% APR

Conclusion

Asset finance is ideal for acquiring business equipment without large upfront costs. With 70-85% approval rates and tax benefits up to 25% of asset value, it is often cheaper than unsecured borrowing.

Choose HP if:

You want to own the asset

Choose Finance Lease if:

You want maximum tax efficiency and latest equipment

Choose Operating Lease if:

Short-term needs or want flexibility

Compare Asset Finance Quotes

We will compare hire purchase, leasing, and loan options

Calculate tax benefits and total cost for your equipment needs

Compare Asset Finance

Frequently Asked Questions

What is asset finance?
+

Asset finance lets you acquire business assets without paying full cost upfront. The equipment itself serves as security, making approval easier than unsecured loans. £37 billion in UK asset finance in 2024 (Finance & Leasing Association).

What types of asset finance are available?
+

Three main types: Hire Purchase (HP) - most popular, pay 10-30% deposit, make fixed monthly payments 12-60 months, you own the asset at the end (5-9% APR for new, 7-12% APR for used). Finance Lease - tax efficient, lease equipment for fixed term 2-7 years, never own it, 100% of payments tax-deductible (4-8% APR). Operating Lease - short-term rental 1-3 years, keep assets off balance sheet (4-8% APR equivalent).

What assets can I finance?
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You can finance: Commercial vehicles (vans, trucks, fleet vehicles £5k-£100k), machinery & equipment (manufacturing, construction, printing £3k-£5m), IT & computers (servers, workstations, software £1k-£500k), catering equipment (ovens, fridges, kitchen fit-outs £2k-£150k), medical equipment (diagnostic, dental, physiotherapy £5k-£500k), agriculture (tractors, harvesters, farm equipment £10k-£1m).

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