Taxes Consolidation Act 1997 section 378

Cars: provisions as to hire-purchase, etc

Section 378 sets out how payments under hire-purchase agreements for expensive cars are treated for tax purposes, in particular where the agreement is terminated before ownership of the car passes to the buyer.

• Applies only to cars whose retail price exceeds the specified amount.
• If a hire-purchase contract ends without the hirer becoming the owner, all payments are recast as ordinary hire charges.
• In that situation, capital allowances and balancing adjustments are disregarded and the payments are restricted under section 377.
• For ongoing hire-purchase contracts, the capital element is fixed by reference to the open market value of the car when the contract was signed.