Step 1: Choose Your Finance Structure
Hire Purchase
Most common for owner-operators. You pay in monthly instalments; the lender holds title until the final payment, when ownership transfers to you. Capital allowances may be claimable by the business.
Chattel Mortgage
Ownership transfers at outset; the lender takes a registered mortgage over the aircraft as security. Used by Lombard. Works well where you want the aircraft in your name from day one.
Finance Lease
The lender owns the aircraft; you lease it for an agreed period and pay rentals. A balloon or residual value is due at the end. Off-balance-sheet treatment may be available under some accounting frameworks.
Operating Lease
True lease with no ownership intention. The lessor retains residual risk. Common for charter operators and airlines. Typically off-balance-sheet for the lessee. Often shorter term - 3–5 years.
Step 2: SPV or Direct Ownership?
Many business jet purchases use a Special Purpose Vehicle (SPV) - a limited company set up solely to own the aircraft. SPV structures offer:
- Liability ring-fencing: if the aircraft is involved in an incident, the claim is against the SPV, not the individual
- VAT efficiency: an SPV that charters the aircraft commercially may recover input VAT
- Succession planning: transferring shares in the SPV is simpler than selling an aircraft
- Multiple ownership: several partners can co-own shares in the SPV
See our dedicated SPV structure guide for more detail.
Step 3: G-reg, N-reg or EI-reg?
G-Registration (UK CAA)
Most straightforward for UK borrowers. Lenders on our panel will finance G-registered jets. UK maintenance requirements (EASA or CAA Part-M). UK CAA oversight.
N-Registration (FAA/USA)
Popular for global travellers - N-reg aircraft can fly to the USA without import complications. Finance more complex: mortgage must be filed with the FAA Oklahoma City registry. Lombard and Close Brothers both finance N-reg; others selective. Maintenance to FAA Part 135/91 standards.
Step 4: VAT Position on Business Jets
VAT on aircraft purchases is complex and fact-specific. The key principles are:
- Business jets used exclusively for business travel with no private use: VAT is normally recoverable by the business
- Aircraft operated commercially for charter under an AOC: input VAT typically recoverable
- Mixed use (some personal flights): HMRC will disallow some or all VAT recovery
- Aircraft held in an SPV that charges for flights: may allow VAT recovery if structured correctly
- Second-hand aircraft from a VAT-registered UK seller: VAT is chargeable; from an overseas seller, import VAT applies
Always take specialist aviation VAT advice before completing a business jet purchase.
Worked Example: £2m Phenom 300 at 6.5% over 7 Years
| Parameter | Value |
|---|---|
| Aircraft | Embraer Phenom 300 (circa 2018) |
| Purchase price | £2,000,000 |
| Deposit (25%) | £500,000 |
| Loan amount | £1,500,000 |
| Interest rate (indicative) | 6.5% per annum |
| Term | 7 years (84 months) |
| Structure | HP (Hire Purchase) |
| Monthly payment (approx) | £22,300 |
| Total repaid over 7 years | £1,873,200 |
| Total interest cost | £373,200 |
Illustrative only. Actual rates, payments and total cost will vary. Arrangement fees not included. Subject to credit and survey.
Step 5: The Application Process
- 1Initial enquiry: Contact Doulton Bridging Finance with aircraft details, proposed loan amount, structure preference and borrower entity
- 2Soft market test: We approach lenders informally to gauge appetite and likely terms before a formal application
- 3Formal application: We package your case - financial statements, aircraft details, maintenance records, proposed structure
- 4Credit decision: 1–5 weeks depending on lender (Close Brothers can be hours)
- 5Survey and legal: Lender commissions an aircraft survey; legal charge/mortgage drawn up
- 6Drawdown: Funds released; aircraft purchase completes