Paying for farm machinery over time

A farm often needs a new tractor, drill or sprayer before the money for it has come in.

Many farmers spread the cost with hire purchase or a lease. The way the deal is set up decides who owns the machine, what tax relief the farm can claim and whether a grant can help with it.

Who owns the machine

With hire purchase, the farm uses the machine while it pays in instalments. HMRC explains that ownership passes when the last payment is made.

With an ordinary lease, the finance company keeps ownership of the machine. Some leases give the farm an option to buy it at the end at market price. HMRC treats the farm as the owner only once it has paid that price.

Tax relief on machinery

A business can deduct the full value of most plant and machinery from its profits before tax, using the annual investment allowance. GOV.UK gives the allowance as £1 million. Cars are left out of it.

On hire purchase, the farm can claim for all the payments under the contract once the machine is in use. The interest is the one part it cannot claim.

A machine on an ordinary lease belongs to someone else, so the farm cannot claim these allowances on it. If the farm sells a machine after claiming, it may owe tax. Your accountant can say how this fits your own year.

Grants and finance

In England, the Rural Payments Agency runs the Farming Equipment and Technology Fund. Farmers, growers, forestry owners and their contractors can apply.

The 2026 round paid 40% or 50% towards listed items, with each grant between £1,000 and £25,000. It funded only new or ex-display items. Anything bought on hire purchase, on a lease or by part exchange was ruled out.

Farmers had to wait for their grant agreement before buying, unless they paid a refundable deposit. They then had to keep the item for five years. The 2026 application window closed at midday on 12 May 2026.

Questions to ask before you sign

Checking the finance company

Members of the Finance & Leasing Association provided £40.3 billion of finance to businesses and the public sector in 2025. The association says that was almost a third of UK investment in machinery, equipment and software.

Its members agree to follow its Business Finance Code. The association closed its own complaints service for business finance on 1 June 2026.

Most small farm businesses can take a complaint to the Financial Ombudsman Service. A sole trader, partnership or company with fewer than 10 staff and a turnover or balance sheet of up to €2 million counts as a micro-enterprise. Larger small businesses can complain too, within set limits. You need to complain to the finance company first.

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