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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Hire purchase agreements: consideration: income/capital: vendor

If you are dealing with a hire purchase agreement, then you need to establish whether the hire charges, see CG12860, are treated as:

  • income receipts


  • capital receipts of the vendor.

Generally, where the vendor is a trader, these will be income receipts. BIM40550 onwards tell you about this. Where these are capital receipts, you apply the same rules as you use in any case involving deferred consideration, TCGA92/S48. CG14881 tells you about these.

Payment of tax

CG12860 tells you that the vendor is treated as having disposed of the asset at the beginning of the hire period. The full amount of the disposal consideration may not be received then. In such cases, you apply the normal rules for the payment of tax in cases involving deferred consideration. CG14910+ tells you about these.