The first method is leasing (sometimes called rental). When you use a lease, the leasing rentals are ordinarily deducted from your profit and loss account as a normal business expense. This is how you claim you tax benefit from leasing the equipment. You pay tax on your profits, less the annualised leasing payments.

Another benefit of leasing is that the VAT on the equipment is paid by the leasing company and the leasing payments are calculated on the ex-VAT price. VAT is then added to these monthly payments and this has the effect of spreading the VAT on the purchase price over the period of the lease, helping to keep your practice under the de-minimus VAT limit in any one year.

The other method of buying equipment is purchase, where the practice owns the equipment for accounting purposes. The same tax regime applies for all purchase finance products, including Hire Purchase, Lease Purchase, Loan or even if you pay cash.
 
In the 2007 budget the Chancellor announced the introduction of Annual Investment Allowances.  This means that, if you opt for an ownership finance product, the first £50,000 spent on specified equipment will be 100% tax allowable in the year of purchase post April 6th 2008. Anything over £50,000 can then be written down in future years at 20% per year on a reducing balance basis. 
 
This information is gratefully received from EB Commercial Finance.