The typical characteristic of such a purchase is that the person acquiring the asset pays for it in instalments and the seller retains ownership until the last instalment has been paid. Lease purchase transactions are similar in nature to hire-purchase, i.e. the lessee of the asset obtains immediately the use of the asset, and at some time in the future also acquires ownership. Provided the lessee does have an ultimate right to acquire the asset, capital allowances will be given to him, rather than to the lessor. The HMRC manual states that hire purchase may (for tax purposes, at least) be considered synonymous with lease purchase.

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