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HMRC internal manual

VAT Supply and Consideration

Supply: Whether supplies are goods or services: Distinguishing between purchase and hire agreements: Credit charges

It is common for most agreements to include a credit charge. Provided this has been clearly identified in the agreement, it is a separate supply of exempt services. Where the credit charge is not separately identifiable however, all monies payable under the terms of agreement will constitute consideration for the supply of the goods. 

Where contracts provide for an optional final payment which is set at or above the anticipated open market value of the asset at the outset of the contract there is a supply of leasing services. There cannot therefore be an exempt credit element (even if agreements show a separate charge) – See VATSC10172