Dental equipment finance for chairs, imaging and scanners

Dental treatment provided by a registered dentist is generally exempt from VAT, so most practices cannot reclaim the VAT they pay on equipment. That changes the comparison between finance types. On hire purchase, VAT on the whole cash price is normally payable at the outset, which can be a substantial sum on a CBCT or a two-surgery refit, and some lenders will fund it separately over a short term. On a lease, VAT is added to each rental instead, so it is spread but never recovered. Neither is automatically cheaper: compare the total cost including VAT, not the headline payment. Practices with significant VAT-able income, such as some cosmetic work or a dental laboratory selling to practices, should ask their accountant how partial exemption applies.

Under hire purchase, the practice is generally treated as the owner for tax purposes and can claim capital allowances, including the Annual Investment Allowance, on qualifying equipment; GOV.UK guidance on the Annual Investment Allowance sets out how it works. Under most leases the rentals are deducted as a business expense instead. Which is better depends on your profits, your structure (company, partnership or sole trader) and other capital spending in the year, so agree it with your accountant before choosing. Our guide to asset finance and capital allowances goes further.

An imaging project is rarely just the unit. New X-ray equipment has to be registered with the Health and Safety Executive under the Ionising Radiations Regulations, needs a radiation protection adviser's critical examination, and may need lead-lined walls, a new electrical supply or a dedicated room. A chair replacement can mean new plumbing, suction lines and cabinetry. Lenders funding hard assets will not always cover these works, so plan the package in two parts: the equipment on hire purchase or lease, and the building and installation costs on a separate loan or a fit-out and refurbishment facility.

Illustration only, with round hypothetical figures. A mixed practice plans a £150,000 upgrade: two chairs and delivery units at £60,000, a CBCT unit at £60,000, and £30,000 of shielding, electrics and cabinetry. The chairs and CBCT go on hire purchase so the practice can claim allowances and keep them for their full life. The VAT due at the start is funded over a short separate term. The £30,000 of works goes on an unsecured term loan. The lender's question is whether the extra implant and private treatment income the CBCT supports, plus existing profit, comfortably covers all three repayments.

Match the term to the useful life. A scanner still under finance after it has been replaced by a newer model is a cost with no return. Watch for balloon payments that leave a lump sum at the end, secondary rental periods on leases that continue until you give notice, and service contracts bundled into the finance so that you keep paying after the warranty lapses. Several small agreements taken on over a few years can also reduce what lenders will offer when you later buy a practice or refinance, because each appears as a fixed commitment. Sometimes the better answer is to keep an older chair running for another year, or to fund a smaller first phase.

If you already own your equipment outright, asset refinancing can release cash from it. For a whole practice purchase, see our page on dental practice acquisition finance, and for equipping a new surgery from scratch, squat practice finance.