Asset finance – How sale‑and‑leaseback and sale‑and‑HP‑back work in the UK

Summary: Sale‑and‑leaseback and sale‑and‑hire‑purchase‑back (sale & HP back) let a company convert owned equipment into immediate cash while continuing to use it. Sale‑and‑leaseback means you sell an asset and lease it back; sale‑and‑HP‑back sells then repurchases via a hire purchase structure so you can own the asset again at the end. These options are forms of asset finance commonly used to improve working capital, refinance debt or preserve bank lines. To explore what might suit your business, get a Free Eligibility Check and we’ll match you to lenders and brokers who specialise in these deals: https://ukbusinessloans.co/get-quote/

We are an introducer — not a lender or regulated financial adviser. This page is for general information only; speak to an accountant, solicitor or regulated adviser before acting.

What are sale‑and‑leaseback and sale‑and‑HP‑back?

Sale‑and‑leaseback: you sell an owned business asset (for example plant, machinery or vehicles) to a funder, and immediately enter into a lease to keep using it. The funder becomes the asset’s owner and you pay regular rentals. Lease types vary — operating leases (off‑balance style historically) and finance leases (capitalised) are both possible depending on structure and accounting rules.

Sale‑and‑HP‑back (sale & hire purchase back): you sell the asset to a funder and then take it back under a hire purchase arrangement, where regular payments are made and the contract normally includes a final payment (balloon or option) that lets you regain legal ownership at the end of the term.

Key differences

• Ownership: sale‑and‑leaseback — funder owns; sale‑and‑HP‑back — funder owns until final HP payment is made (borrower can usually become owner at term end).
• End‑of‑term options: leases typically require return, renewal or renegotiation; HP usually allows purchase via final payment.
• Accounting/tax treatment differs between lease and HP structures — get professional advice for your circumstances.

How these deals fit within asset finance and business loans

Both are asset finance tools designed to release capital tied up in fixed assets without taking them out of use. They sit alongside other options such as direct leasing, hire purchase to acquire equipment, asset refinancing and asset‑based lending.

Typical use cases include:

• Freeing working capital to fund growth, payroll or contract deposits.
• Refinancing existing secured debt (by replacing other security with lease arrangements).
• Preserving bank borrowing headroom by converting owned assets into lease liabilities.
• Funding seasonal or sudden cash‑flow needs quickly.

For a broader overview of asset finance solutions you can also read our asset finance guide on asset finance.

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Typical terms, pricing and eligibility lenders look for

Advance and LTV: most funders lend against a percentage of the asset’s market value. Advances commonly range from 30% to 70% of the realisable value, depending on asset type, age and market.

Term: often 2–7 years, matching expected useful economic life for the asset; vehicles and IT equipment may have shorter terms, plant and property‑grade equipment may be longer.

Costs: lease rentals or HP repayments include interest or margin, plus fees (valuation, documentation, setting up, and occasionally early‑termination charges). HP structures may include a final balloon payment which you must be ready to pay or refinance.

Eligibility factors lenders assess:

• Asset type, age and condition — younger, mobile and easily re‑sold assets are preferred.
• Evidence of ownership — clear title and absence of existing security are important.
• Company trading history, management background and bank statements.
• VAT status and any tax liens or CCJs.

Specialist funders and leasing houses are the usual providers. Brokers can help identify which funder will value your asset most favourably.

Accounting, tax and legal considerations

Accounting: lease vs HP treatment differs under UK GAAP/IFRS. Finance leases and most leases under IFRS 16 result in balance‑sheet recognition; operating leases may have different impacts. The precise accounting depends on contract terms — consult your accountant before signing.

Tax: the sale could create a capital gain/loss and VAT may be due on the sale. Lease or HP payments generally count as allowable business expenses, but tax relief and capital allowances depend on structure and asset class. Always obtain tailored tax advice.

Legal: documentation typically includes a sale agreement, lease or HP agreement, and registration of any security. Check Companies House for existing charges and ensure you have authority to sell the asset if it’s security for other lending.

This is general information and not tax, accounting or legal advice — speak to your professional adviser for how the rules apply to you.

Pros and cons — is it right for your business?

Pros

• Rapid access to cash without removing the asset from operational use.
• Can be quicker than negotiating bank refinancing.
• Flexible options at term end (depending on structure) — return, renew or buy.
• Helpful for cashflow, winning contracts or smoothing seasonal peaks.

Cons

• Total cost over term can be higher than continuing to own an asset outright.
• Contractual obligations such as maintenance, insurance and return condition.
• You may reduce security available for future asset‑backed borrowing since the asset is sold.
• Some older or specialised assets may be rejected or attract lower valuation.

Decision checklist — consider sale‑and‑leaseback or sale‑and‑HP‑back when:

• You need immediate cash and cannot wait for other financing.
• You must keep using essential equipment.
• You want to refinance or reduce secured borrowing secured against the asset.

Avoid these deals if you expect to hold the asset long term and already have sufficient low‑cost finance in place.

Interaction with other UK business loans and facilities

Sale‑and‑leaseback replaces an owned asset with a contractual liability. That can improve short‑term liquidity but may reduce collateral available for future asset‑backed facilities. It can be used to refinance existing secured or unsecured borrowing, consolidate debt or to supplement facilities such as invoice finance or overdrafts.

Important: always disclose existing charges and creditor arrangements when seeking offers — brokers will assess how a sale‑and‑leaseback will interact with your wider debt structure and advise on priority and security implications.

Typical process and timeline (what to expect)

1. Initial enquiry & asset list — provide descriptions, ages and photos.
2. Valuation & credit review — funder assesses market value and business risk.
3. Offer (term sheet) — outlines advance, term, rentals and fees.
4. Legal checks & searches — confirm title, existing charges and documentation.
5. Completion — sale proceeds paid and lease/HP payments commence.

Timeline: straightforward deals often complete in 1–4 weeks; complex assets or ones with title issues can take longer.

Common documents requested: company accounts, bank statements, VAT returns, proof of ownership, maintenance records and recent photographs of the asset.

How UK Business Loans helps

We connect UK limited companies requiring from around £10,000 upwards with specialist lenders and brokers experienced in sale‑and‑leaseback and sale‑and‑HP‑back deals.

How it works: complete our short enquiry and we’ll match you to the best panel partners who can review your case quickly. Our service is free and designed to save you time comparing providers.

Get a Free Eligibility Check — it takes only a few minutes and helps us find the most appropriate funders for your asset and sector.

FAQs

What assets can be used for sale‑and‑leaseback?

Typically plant, machinery, commercial vehicles, construction plant and other high‑value equipment. Lenders prefer assets that retain resale value and are easy to re‑market.

Will I lose my asset after sale‑and‑leaseback?

You lose legal ownership but generally keep operational use under the lease. At the end of the term you follow the contract’s return, renewal or purchase options.

Is sale‑and‑leaseback taxable?

Tax consequences vary (VAT, capital gains, capital allowances). Lease payments are often deductible but get specific advice from your accountant.

Can I use sale‑and‑leaseback with poor credit?

Some specialist funders focus more on asset value than credit history, but expect higher pricing or stricter terms. Brokers can identify appropriate funders.

How long does it take?

Usually 1–6 weeks from initial enquiry to completion, depending on valuation and legal checks.

Will sale‑and‑HP‑back let me own the asset again?

Yes — hire purchase terms normally include a final payment allowing you to regain legal title at term end.

Next steps & reassurance

If you want to explore sale‑and‑leaseback or sale‑and‑HP‑back options, the quickest way is to request a Free Eligibility Check and receive matched quotes: Get a Free Eligibility Check. Submitting the enquiry is not an application — it simply allows our panel to assess suitability and provide no‑obligation quotes.

UK Business Loans is an introducer. We do not provide regulated financial, tax or legal advice and we are not a lender. Always consult your accountant or solicitor for professional advice specific to your situation.

Recommended information to have ready for an enquiry: company name, contact details, company registration number (optional), asset description and age, estimated resale value, amount of funding required (£), preferred structure (sale & leaseback / sale & HP back / unsure), trading history (years), and consent to be contacted.

Get Quote Now — Free Eligibility Check

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Published by UK Business Loans content team — last reviewed 1 November 2025.

1. What is sale-and-leaseback and how does it work? — Sale-and-leaseback lets you sell owned equipment to a funder and immediately lease it back to keep using it while releasing cash, with sale‑and‑HP‑back offering a hire‑purchase route to regain ownership at term end.

2. What types of assets qualify for sale-and-leaseback? — Lenders typically accept high‑value, mobile or specialist assets such as plant, machinery, commercial vehicles and certain equipment, assessing age, condition and resale market.

3. How much cash can I raise with a sale-and-leaseback? — Advances commonly range from around 30–70% of the asset’s realisable market value depending on asset type, age and lender appetite.

4. How long does a sale‑and‑leaseback or sale‑and‑HP‑back take to complete? — Straightforward transactions often complete in 1–4 weeks, with typical timelines of 1–6 weeks overall depending on valuation, legal checks and complexity.

5. Will I lose ownership and use of the asset after a sale‑and‑leaseback? — You transfer legal title to the funder but normally retain operational use under the lease, and sale‑and‑HP‑back usually allows you to repurchase the asset by making the final HP payment.

6. Can businesses with poor credit access sale‑and‑leaseback finance? — Possibly—specialist funders focus more on asset value than credit history, though you may face higher pricing or stricter terms and a broker can help find suitable lenders.

7. What are the tax and accounting implications of sale‑and‑leaseback? — Tax and accounting outcomes vary (VAT, capital gains, capital allowances and lease vs HP balance‑sheet treatment), so obtain tailored advice from your accountant or tax adviser.

8. How will sale‑and‑leaseback affect my existing loans and security? — It replaces owned-asset security with a lease liability which can improve short‑term liquidity and bank headroom but may reduce collateral available for future asset‑backed borrowing, so always disclose existing charges.

9. What information and documents do lenders usually require? — Funders typically request company accounts, bank statements, VAT returns, proof of ownership, maintenance records and recent photographs of the asset for valuation and credit checks.

10. How can UK Business Loans help me arrange a sale‑and‑leaseback or sale‑and‑HP‑back? — UK Business Loans is a free introducer that matches your short enquiry to specialist brokers and lenders who can assess eligibility and provide no‑obligation quotes, and submitting the form is not a formal application.