Plastics Manufacturing Equipment Finance: Lease vs HP Explained
A clear comparison of Hire Purchase, Finance Lease, and Operating Lease for injection moulding plant - with a worked example on a £200,000 press.
HP vs Finance Lease vs Operating Lease - Key Differences
Factor
Hire Purchase (HP)
Finance Lease
Operating Lease
Asset ownership
You own it at end of term
Lender owns it (peppercorn secondary)
Lender owns it - returned at end
Balance sheet treatment
On balance sheet (asset + liability)
On balance sheet (IFRS 16)
Off balance sheet (operating expense)
Tax treatment
Capital allowances (AIA available)
100% of rentals tax-deductible
100% of rentals tax-deductible
Monthly cost
Moderate
Moderate
Lowest (lender holds residual risk)
Residual value risk
Yours
Partly yours (balloon on some products)
Lender's
Best for
Long-term asset ownership
Tax efficiency, retain use
Regular machine upgrades
Available lenders
All 8 on our panel
All 8 on our panel
Close Brothers, Shawbrook, Aldermore
Worked Example - £200,000 Injection Moulding Press
Hire Purchase - 5 Years at 7.0% APR
Finance amount
£180,000 (10% deposit)
Monthly payment
£3,564
Total repaid
£213,840
Interest cost
£33,840
Ownership at end
Yes
Tax benefit
Capital allowances on £200k
Finance Lease - 5 Years at 7.0% APR
Finance amount
£200,000 (no deposit)
Monthly rental
£3,910
Total rentals
£234,600
Tax deduction
100% of rentals
Ownership at end
No (secondary rental available)
Deposit required
None
Operating Lease - 5 Years
Finance amount
£200,000
Monthly rental
£3,200 (est.)
Total rentals
£192,000
Tax deduction
100% of rentals
Ownership at end
No - asset returned
Residual risk
Lender's
All figures are illustrative. Actual rates and payments depend on lender, credit profile, and asset details. Speak to your accountant before selecting a finance product.
Which Option Is Right for Your Plastics Business?
Choose HP if…
You want to own the machine outright at the end of the term
You want to claim AIA or capital allowances in year one
You plan to keep the machine for 7–10+ years
You are comfortable with a 10% deposit
Choose Finance Lease if…
You want 100% finance (no deposit) while keeping cash in the business
Your accountant recommends a rental deduction rather than capital allowances
You want flexibility to upgrade or extend at the end of the primary term
Choose Operating Lease if…
You regularly upgrade your injection moulding machinery (e.g. every 5 years)
You want the lowest possible monthly payment
You do not need to own the asset and want the lender to carry residual value risk
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FAQs
Frequently asked questions
Is hire purchase or finance lease better for a £200k injection moulding press?
For most plastics manufacturers, HP is the better choice if you intend to keep the press long-term and want to claim Annual Investment Allowance or capital allowances. Finance Lease is preferable if you want to keep the asset off the balance sheet and maximise the rental deduction against profits. Your accountant can confirm the optimal structure for your specific tax position.
Can I switch from Finance Lease to HP mid-term?
No - finance products are generally fixed at the point of agreement. However, you may be able to terminate the lease early (subject to an early termination charge) and refinance on HP terms. Speak to us before making any changes.
Does Finance Lease or HP offer better rates for injection moulding equipment?
Rates are typically comparable for HP and Finance Lease on our lender panel. The choice should be driven by accounting and tax considerations rather than rate alone.
What happens at the end of an Operating Lease on an injection moulding machine?
At the end of an Operating Lease, you return the machine to the lender (who then sells or re-leases it), or you may be able to extend the lease at a reduced rental. You do not have the option to purchase the machine without a separate arrangement at market value.
Can I claim capital allowances on an injection moulding machine on Finance Lease?
No - capital allowances are only available to the legal owner of the asset. Under Finance Lease, the lender retains ownership, so you cannot claim capital allowances. Instead, 100% of the lease rentals are deductible as a business expense.
Asset finance for business purposes is not regulated by the FCA. Rates shown are indicative as at October 2026 and depend on credit profile, term, asset and deposit. We act as a credit broker, not a lender. Your asset may be repossessed if you do not keep up repayments.
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