Introduction
Forklifts and industrial handling equipment represent a significant capital outlay for most businesses. Finance allows you to spread the cost over 2–5 years, preserve working capital and - in most structures - reclaim VAT immediately if you are VAT-registered.
This guide walks you through the main finance options available in the UK market, how to assess which is right for your business, what lenders look for, and a fully worked cost example.
Worked Example: £35,000 Electric Counterbalance Forklift
Hire Purchase - 5 Year Term
| Detail | Figure |
|---|---|
| Asset price (inc VAT) | £42,000 |
| VAT reclaimed (if VAT registered) | –£7,000 |
| Net asset cost | £35,000 |
| Deposit (10%) | £3,500 |
| Amount financed | £31,500 |
| Term | 5 years (60 months) |
| Rate (7.0% p.a. flat) | 7.0% |
| Estimated monthly payment | ~£762 |
| Total cost of credit | ~£14,220 |
| Asset owned at end? | Yes - via option to purchase |
Figures are illustrative. Actual payments depend on lender, credit profile and deposit. VAT on the asset is paid upfront but fully reclaimable in the next VAT return for VAT-registered businesses.
Finance Options Compared
| Structure | Own at End? | Balance Sheet | Tax Treatment | Best For |
|---|---|---|---|---|
| Hire Purchase (HP) | Yes | On balance sheet | Capital allowances (AIA) | Businesses wanting ownership |
| Finance Lease | No (sell & share proceeds) | Off balance sheet* | Rental payments deductible | Balance sheet efficiency |
| Operating Lease | No - return or upgrade | Off balance sheet | Rental payments deductible | Flexibility & refresh cycles |
| Sale & Leaseback | No (lease back what you sold) | Capital released | Rental payments deductible | Releasing capital from owned assets |
*IFRS 16 may require finance leases on balance sheet for larger companies. Confirm with your accountant.
Eligibility - What Lenders Look For
Core Criteria
- UK-registered limited company, LLP, or sole trader
- Typically 2+ years trading (some lenders accept 12m)
- Filed accounts or management accounts
- Clean or manageable credit history
- Asset age within lender guidelines (usually <10–15 years)
Documents Typically Required
- 2 years filed accounts or management accounts
- 3–6 months business bank statements
- Asset invoice or dealer quote
- Director ID (passport / driving licence)
- Proof of business address