HP Hire Charges & Tax Relief

[bugle]

Hi,

I've been quoted two different HP agreements, one is a higher APR.

For example one has finance charges of £8000 and the other £5000.

Which is best for Tax Relief? I've been told the higher one, but it just seems against my logic to go for the higher agreement.

Any thoughts would be appreciated?

Thank you

[Incredulum]

If I understand you:


If you give £8k to the company then (at 20%) that saves you £1,600 tax.
If you give £5k to the company then (at 20%) that saves you £1,000 tax.

So yes a higher cost gives you more tax relief.


BUT, your overall position is:

If you give away 8k and get back 1.6k then it has cost you 6.4k
If you give away 5k and get back 1k then it has only cost you 4k.