Hire Purchase

A credit agreement whereby you hire an item pending final purchase (for example, a car, laptop or television) and pay an agreed amount in monthly payments is called a 'Hire Purchase' agreement. You do not own the item until you have made the final payment, although for UK tax purposes the asset can be claimed at it's full value for capital allowance purposes (see 'Capital Allowances') after the first payment has been made. Additionally, the credit (interest) and set up charges can be claimed as an allowable expense in the tax year that they are paid.