asset-finance

---
name: asset-finance
description: Turns the kit you need into the finance structure that actually fits it, before you sign anything: a written match against what you are buying, hire purchase, finance lease or operating lease compared side by side on who owns the asset and when, the capital allowances position for each structure with the figure your accountant will actually use, the balance sheet treatment, the personal guarantee question recorded and left to you, and a total cost of credit comparison across every quote you hold. Use before you order the oven, the van or the EPOS system, not after the finance company has already sent the agreement.
---

# The finance structure matched to the asset, with ownership, tax and total cost worked out before you sign

You give this the asset you want to buy, its price from a real quote, the quotes you have from finance providers, your legal form and your last two sets of accounts. You get back a side by side comparison of hire purchase, finance lease and operating lease against that specific asset, a statement of who owns it and when ownership can transfer under each structure, the capital allowances position each structure produces, whether the asset and the finance sit on or off your balance sheet, a personal guarantee register, and a total cost of credit figure for every quote you hold. It will not tell you which structure to choose. Whether you want to own a twelve year old combi oven outright or hand back a van every three years is a decision about how your business runs, and no document can make it for you.

## What it does

1. **Write down what the asset actually is and how long you will use it, before comparing a single quote.** An asset used for its whole working life, such as a combi oven, a walk in fridge or a fixed EPOS terminal, sits differently to an asset you will want to replace on a cycle, such as a delivery van or a laptop fleet. The Finance & Leasing Association frames the choice in one sentence: asset finance is "a term used to describe leasing and hire purchase solutions for businesses", and the solution that fits changes with what the asset is for. Write the asset, its price from a supplier quote, and whether you expect to want it, replace it or hand it back in three years' time. That sentence decides which rows of the comparison in step 2 are worth building.

2. **Build the three way comparison on who owns the asset and when, using the definitions as they are actually written, not as they are commonly misremembered.** Hire purchase: "the customer takes ownership of the asset after all payments are made", and until then "the ownership remains with the finance provider". A finance lease "transfers all the rights and obligations of ownership, like maintenance and insurance, to the lessee, and over the lifetime of the agreement, the lessee will have paid at least 90% of the fair value, or market value of the asset", but ownership itself is never transferred: at the end of a finance lease the business continues renting, returns the asset, or arranges its sale on the finance provider's behalf. An operating lease "is appropriate if the business does not need the equipment for the entirety of its working life", and here the leasing company keeps the maintenance obligation and takes the asset back at the end. Put these three rows against the asset from step 1 and mark which one produces the outcome the owner actually wants.

3. **Work out the capital allowances position for each structure, because it is not the same fact as who legally owns the asset.** Capital Allowances Act 2001 section 67 answers this directly for hire purchase: where a contract is one under which the business "shall or may become the owner" of the asset on performance of the contract, the plant or machinery "is to be treated for the purposes of this Part as owned by" the business, even though legal title has not yet passed. HMRC's own manual states the practical effect: "The hire purchase legislation treats a person as the owner of an asset being bought on hire purchase even though as a matter of law the asset belongs to somebody else." A business on hire purchase can therefore claim capital allowances, including the Annual Investment Allowance, which stands at "£1 million" from 1 January 2019, from the start of the contract. A finance lease that meets the same section's conditions follows the hire purchase treatment. An operating lease does not: legal and beneficial ownership sit with the lessor throughout, and it is ordinarily the finance provider, not the business paying the rentals, who claims the allowances. Write which side of that line each quote falls on, because it changes the tax relief timing the accountant will build into the year's figures.

4. **Record the balance sheet treatment for each structure, and flag that the rules are changing.** Historically a finance lease brought a right of use asset and a matching lease liability onto the balance sheet, while an operating lease's rental payments were simply expensed through the profit and loss account and the asset never appeared on the balance sheet at all. Lease accounting under FRS 102 is moving away from that distinction as amended standards come into effect, bringing most leases, including many that would previously have been treated as operating leases, onto the balance sheet as a right of use asset and a liability. Record the structure and the amount, and put a note in the file that the accountant should confirm which version of FRS 102 applies to the accounting period the asset falls into, because a finance structure chosen for its balance sheet effect can lose that effect between the quote and the year end.

5. **Check the regulated status of the borrowing before recording anything else about the agreement.** A credit agreement is exempt from FCA consumer credit regulation where "the lender provides the borrower with credit exceeding £25,000" and the agreement is "entered into by the borrower wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by the borrower". A limited company borrowing for the business sits outside the consumer credit regime on that basis at any amount, because the borrower is not an individual. A sole trader or a small partnership financing an asset below that threshold is generally inside it. Mark each quote regulated, exempt business lending or company borrowing, and note that a credit broker introducing the deal can remain separately regulated even where the underlying agreement is exempt, so a broker's fee disclosure is a different question to the agreement's own status.

6. **Record what security each structure actually gives the finance provider, and treat the asset itself as the first line, not the personal guarantee.** Under hire purchase and a finance lease the finance provider already owns the asset until the contract ends or the rentals are paid, which is real security and is why these structures are often available to a business that a straightforward loan would decline. A personal guarantee, where one is asked for on top of that, is a separate promise from the owner's own assets and is common on a limited company's first facility with a new provider. Record whether each quote asks for one, whether it is capped, and leave the decision to sign untouched. That decision is the owner's, with their own solicitor, and it does not become simpler because the finance provider already holds the asset as security.

7. **Compare every quote on total cost of credit over the full term, never on the headline rate or the monthly payment alone.** For each quote, write the cash price of the asset, any deposit, the rate and whether it is fixed, every arrangement or documentation fee, the monthly payment, the number of payments, any final payment or balloon required to take ownership under hire purchase, and the total of every pound paid across the term. Sum it. A structure with a lower monthly figure and a large final payment can cost the same or more than one with a higher monthly figure and nothing owed at the end, and the only column that shows that honestly is the total.

8. **Read what happens if the asset breaks, if you want to end the agreement early, or if you want to upgrade, and write the answer against each quote.** Maintenance responsibility sits with the lessee under a finance lease and with the finance provider under an operating lease. Early settlement terms on an exempt business agreement are set by the contract, not by a statutory rebate scheme, because the statutory early settlement rebate that applies to a regulated consumer credit agreement does not extend to an agreement exempted by the £25,000 business threshold. Read the actual clause in each quote rather than assuming a consumer-style protection applies, and write down what it says.

9. **Hand the arithmetic, the comparison table and the file building to Codex, and keep the reading of the definitions and the regulations here.** Write the inputs into a working folder, then run:

   ```
   codex exec --sandbox danger-full-access --skip-git-repo-check -C "<working folder>" - < CODEX.md
   ```

   Claude hands over the asset description with its price and expected working or replacement life, the quotes exactly as the finance providers stated them, the legal form and entity details, and the owner's answers on maintenance and early settlement. Codex returns the three way structure comparison, the capital allowances position for each quote, the balance sheet flag, the regulated status column, the guarantee register and the total cost of credit table sorted ascending. Codex decides none of it.

10. **Finish with one page naming the structure the owner is leaning toward, and date it.** The asset, the price, the structure, the total cost, the ownership outcome at the end of the term, and the date every quote was read. A comparison built in September against a supplier's September price list is not the same comparison in January, and an undated file gets reused against a quote that has since expired.

## Then it checks

1. Every candidate quote states which of hire purchase, finance lease or operating lease it is, and the file states who owns the asset and when ownership transfers, or that it never transfers, for each one.
2. The capital allowances position is stated for every quote, naming whether the business or the finance provider is treated as the owner for that purpose, with the statutory basis named.
3. The balance sheet treatment is recorded for every quote, and the file contains a note that the accountant should confirm the applicable version of FRS 102 for the relevant accounting period.
4. Every quote carries a regulated status of exactly regulated, exempt business lending or company borrowing, with the entity type and the amount it was assessed against.
5. Every quote states whether a personal guarantee is required and, where one is, whether it is capped, and no guarantee row is left blank where the quote is silent, that row instead reading not stated.
6. The total cost of credit is complete for every quote with a cash price and a full payment schedule supplied, the quotes are sorted by it, and no comparison is made on the monthly payment or the headline rate alone.

Any check fails: name it, redo that step once. Failed twice: say what is wrong and stop.

## Rules
- Public information only.
- Never invent a fact, a number or a quote.
- Anything sent in someone's name says whose name it is.
- Never state a typical approval rate, a usual deposit percentage, a normal residual value or an average interest rate for asset finance. No published figure exists for a single independent UK hospitality business, and an owner who prices against a borrowed figure will misjudge every quote that follows.
- Never decide whether to sign a personal guarantee, and never present one as routine because the finance provider already holds the asset as security. It puts the owner's own assets at risk beyond the asset being financed, and the decision is the owner's alone, taken with their own solicitor.
- Never claim a structure keeps an asset off the balance sheet without the accountant confirming the version of FRS 102 that applies. The rules distinguishing a finance lease from an operating lease for accounting purposes are changing, and a structure chosen for a balance sheet effect that no longer applies is a structure chosen on a fact that has expired.
- Never compare two quotes on the monthly payment alone. A final or balloon payment under hire purchase, or a mileage or condition charge at the end of an operating lease, belongs in the total cost, not in a footnote.
- Never assume a statutory early settlement rebate applies to an exempt business agreement. That protection attaches to a regulated consumer credit agreement, and an asset finance agreement to a limited company for more than £25,000 is not one.
- This output is a working document prepared for the owner to check against their own quotes, and for their own accountant to review on the capital allowances position, the balance sheet treatment and VAT. Where the borrowing is regulated, or any security is a personal guarantee or a charge over a home, it is also for their own solicitor and an FCA authorised adviser. It is not advice, it is not a recommendation to take any product, and it is not a statement that any structure is suitable.

## Built from
- British Business Bank, "What is asset finance?", https://www.british-business-bank.co.uk/business-guidance/guidance-articles/finance/what-is-asset-finance, article dated 24 October 2023, read 23 September 2026: the definitions of finance lease, operating lease and hire purchase and their ownership and maintenance consequences, in step 2.
- Finance & Leasing Association, "Business customer information", https://fla.org.uk/asset-finance/business-customer-information/, no publication date shown on the page, read 23 September 2026: the asset finance definition in step 1, and the finance lease and operating lease wording, including the 90 percent fair value test, in step 2.
- Capital Allowances Act 2001, section 67, https://www.legislation.gov.uk/ukpga/2001/2/part/2/chapter/6/crossheading/hirepurchase-and-similar-contracts, stated on the page as up to date with all changes known to be in force on or before 23 September 2026, read 23 September 2026: the statutory ownership treatment for hire purchase and qualifying finance lease contracts in step 3.
- HM Revenue and Customs, "Capital Allowances Manual CA23320: Plant and Machinery Allowances: Hire purchase etc: Contracts within CAA01/S67", https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23320, updated 8 July 2025, read 23 September 2026: the practical statement that hire purchase legislation treats the payer as owner for allowances purposes, in step 3.
- GOV.UK, "Annual Investment Allowance", https://www.gov.uk/capital-allowances/annual-investment-allowance, no publication date shown on the page, read 23 September 2026: the £1 million allowance figure in effect from 1 January 2019, in step 3.
- ACCA, "Lease accounting under FRS 102", technical factsheet, https://www.accaglobal.com/content/dam/ACCA_Global/Technical/fact/tf-lease-accounting-under-frs102-1024.pdf, read 23 September 2026: the balance sheet treatment of a finance lease as a right of use asset and lease liability against an operating lease's expensed rentals, in step 4.
- The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, article 60C, https://www.legislation.gov.uk/uksi/2001/544/article/60C, stated on the page as up to date with all changes known to be in force on or before 23 September 2026, read 23 September 2026: the exemption for business credit exceeding £25,000 in step 5.
- The Consumer Credit (Early Settlement) Regulations 2004, regulation 2, https://www.legislation.gov.uk/uksi/2004/1483, read 23 September 2026: the statutory rebate applying only to a regulated consumer credit agreement, behind the early settlement caution in step 8.

# asset-finance

## You are given
One UK hospitality business wanting to buy an asset. The asset description, its cash price from a supplier quote with the quote's date, and the owner's statement of the asset's expected working life and whether they expect to want, replace or hand it back within that life. The legal form of the business and, for a partnership, the number of partners and how many are bodies corporate. The quotes the owner has gathered, and for each one: the finance provider's name, the structure named by the provider as exactly one of hire purchase, finance lease or operating lease, the cash price it is quoted against, any deposit, the rate and whether it is fixed or variable, every fee with its amount and basis, the monthly payment, the number of payments, any final or balloon payment, whether a personal guarantee is required and whether it is capped, the maintenance responsibility as stated in the quote, and the early settlement terms as stated in the quote. The date and source of every figure. All judgement calls, including which quotes to gather and which structure to prefer, have already been made by the owner and are supplied to you.

## Produce
Write into a `./asset-finance-output/` folder:

1. `asset.md` recording, on separate lines and nothing else: the asset description; the cash price; the source quote name and its date; the expected working life in years as supplied; and the owner's stated intention, which must be exactly one of `keep for full working life`, `replace on a cycle`, or `not stated`.
2. `structure-comparison.csv` with these columns in this order: `quote_ref`, `provider_name_verbatim`, `structure`, `owns_asset_during_term`, `ownership_transfers`, `ownership_transfer_condition_verbatim`, `maintenance_responsibility`, `end_of_term_outcome_verbatim`. `quote_ref` is Q001 upward. `structure` is exactly one of `hire purchase`, `finance lease`, `operating lease`. `owns_asset_during_term` is exactly one of `finance provider`, `business`. `ownership_transfers` is `yes` or `no`. `maintenance_responsibility` is exactly one of `business`, `finance provider`, `not stated`.
3. `capital-allowances.csv` with columns: `quote_ref`, `structure`, `allowances_claimant`, `statutory_basis_verbatim`, `aia_eligible`. `allowances_claimant` is exactly one of `business`, `finance provider`, `not determinable from supplied structure`. `aia_eligible` is `yes`, `no` or `not stated`, and is `yes` only where `allowances_claimant` is `business`.
4. `balance-sheet.csv` with columns: `quote_ref`, `structure`, `on_balance_sheet_as_supplied`, `frs102_confirmation_recorded`. `on_balance_sheet_as_supplied` is exactly one of `asset and liability`, `expensed only`, `not stated`. `frs102_confirmation_recorded` is `yes` only where the owner has supplied a note that their accountant has confirmed the applicable standard, otherwise `no`.
5. `regulated-status.md` stating, for each `quote_ref`, the amount of credit, the legal form of the borrower, whether the credit exceeds £25,000, and the resulting status of exactly `regulated`, `exempt business lending` or `company borrowing`, each line naming the supplied figure it rests on.
6. `guarantee-register.csv` with columns: `quote_ref`, `provider_name_verbatim`, `guarantee_required`, `guarantee_wording_verbatim`, `capped_or_unlimited`, `cap_amount_gbp`. `guarantee_required` is `yes`, `no` or `not stated`. `capped_or_unlimited` is exactly one of `capped`, `unlimited`, `not stated`.
7. `total-cost.csv` with columns: `quote_ref`, `provider_name_verbatim`, `cash_price_gbp`, `deposit_gbp`, `sum_of_fees_gbp`, `sum_of_payments_gbp`, `final_payment_gbp`, `total_paid_gbp`, `total_cost_of_credit_gbp`, `rank`. `total_cost_of_credit_gbp` is `total_paid_gbp` plus `deposit_gbp` minus `cash_price_gbp`. Sorted ascending by `total_cost_of_credit_gbp`. A row missing any figure needed for the calculation is placed at the end with `rank` left empty and is listed in `gaps.md`.
8. `early-settlement-and-maintenance.csv` with columns: `quote_ref`, `early_settlement_terms_verbatim`, `statutory_rebate_applies`. `statutory_rebate_applies` is `no` in every row where `regulated-status.md` records that quote as `exempt business lending` or `company borrowing`, and is `not determined` only where the regulated status itself could not be determined.
9. `gaps.md` a numbered list of: every quote missing a named structure; every quote where the ownership transfer condition was not supplied; every capital allowances row reading `not determinable from supplied structure`; every balance sheet row reading `not stated`; every guarantee row reading `not stated`; every quote excluded from ranking in `total-cost.csv` and the exact figure missing; and any supplied text containing an em dash character.

## Rules
- Codex compares, calculates and records. It never chooses a structure, never recommends a quote, never decides whether a personal guarantee should be signed, and never determines the applicable version of FRS 102 beyond recording whether the owner has supplied a confirmation from their accountant.
- Never estimate a figure. A quote with no supplied final payment has an empty cell in that column, not a zero, unless the owner has explicitly supplied a zero.
- Never write a benchmark figure of any kind into any file: no typical deposit percentage, no typical residual value, no average asset finance rate. None exists for a single independent UK hospitality business and none is to be recorded.
- Never write any statement, in any file, about whether an application for any quote would be approved. That determination belongs to the finance provider.
- Never mark `allowances_claimant` as `business` for a structure recorded as `operating lease`. Only `hire purchase` and a `finance lease` meeting the statutory conditions carry that treatment, and where the finance lease conditions were not supplied, the row reads `not determinable from supplied structure`.
- Never mark `statutory_rebate_applies` as `yes` for any exempt business lending or company borrowing row, regardless of what a quote's own marketing wording claims.
- Use British English, GBP written as `GBP` or the pound sign, and DD Month YYYY dates. No em dash characters in any file you write, and any supplied text containing one is recorded verbatim and flagged in `gaps.md`.
- Every quoted provider name, structure name and clause is copied exactly, including its punctuation and capitalisation.
- Every file ends with this line: this is a working document prepared for the owner to check against their own quotes, and for their own accountant to review on the capital allowances position, the balance sheet treatment and VAT, and for their own solicitor and an FCA authorised adviser where the borrowing is regulated or any security is a personal guarantee or a charge over a home. It is not advice and it is not a recommendation to take any product.

## Return
The absolute path of every file written, the row count of each CSV, the asset description with its cash price, the structure recorded for every quote with its ownership transfer position, the capital allowances claimant for every quote, the count of balance sheet rows where FRS 102 confirmation has not been recorded, the regulated status counts by category, the count of quotes requiring a personal guarantee and how many are capped, unlimited or not stated, the ranked total cost of credit list with the cheapest and dearest figures in pounds and the gap between them, and the gaps.md item count.