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.
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
Hire Purchase (HP)
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
Businesses wanting to own assets, vehicles, equipment you will keep 5+ years
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)
Assets that depreciate quickly (IT, vehicles), businesses wanting latest technology, cash flow optimization
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)
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.
What Gets Approved Easily vs Difficult
Easy Approval (85%+ rates)
Harder Approval (60-70% rates)
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 £50,000 capital allowance in year 1
Corporation tax saving: £50,000 × 19% = £9,500
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 FinanceFrequently 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?+
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).