Glossary · UK
What is Asset Finance?
Funding that lets a business acquire or use equipment, vehicles or machinery by spreading the cost over time rather than paying upfront.
Full Definition
Asset finance is a form of business funding used to obtain physical assets -- such as vehicles, plant, machinery, IT or office equipment -- without paying the full price at once. Common types include hire purchase (where the business pays instalments and eventually owns the asset), finance leases and operating leases (where the business rents the asset, sometimes with an option to buy or return it), and refinancing existing assets to release cash. Repayments are spread over an agreed term with interest, helping cash flow and preserving working capital. The asset itself usually acts as security, which can make approval easier for smaller firms than an unsecured loan. Tax treatment varies by structure: hire-purchase and outright-purchase assets may qualify for capital allowances against Corporation Tax (19% on profits up to GBP 50,000, 25% above GBP 250,000, with marginal relief between for 2026/27), while lease rentals are often deducted as a business expense. Always confirm the accounting and tax position with an accountant.