There is no single answer — it depends on whether your business can actually use capital allowances this year. Buying on hire purchase generally lets you claim allowances on the asset cost and deduct the interest. Leasing gives you no allowances but lets you deduct the rentals. Which produces a better outcome depends on your profits, your tax position and your timing.
Buying tends to suit a profitable business with taxable profit to shelter, that wants the asset long term and can use the allowances available in that period. The relief comes early and you keep the asset at the end.
Leasing tends to suit a business that cannot use a large allowance this year — because profits are low, it is loss-making, or it has already used its allowance elsewhere — or that wants to keep the asset off its books, replace the equipment regularly, or preserve headroom on other borrowing. Spreading the deduction evenly across the term can be more useful than a large one-off relief you cannot absorb.
Tax should not be the only test. Total cost over the term, what happens at the end of the agreement, how quickly the asset dates, maintenance obligations and the effect on your borrowing capacity usually matter more to the business than the tax line. Allowances and tax rates also change between Budgets, and relief is only ever worth your prevailing rate of tax, so a comparison run last year may no longer hold.
CW Asset Finance can source and compare both structures across our panel of more than 60 lenders, but we are a credit broker, not a tax adviser. Run the tax comparison with your accountant and bring the answer back to us.
This is general information, not tax advice. Confirm your own position with your accountant or HMRC.