An operating lease is similar to contract hire however it is only for part of the asset’s useful lifetime. The rentals are based on the difference between the purchase price and the residual value of the asset at the end of the term of the agreement.
Lower cost upfront as the VAT is spread over the rentals rather than due on day one
Rental is reduced as it is only based on a proportion of the original cost of the goods
You can reclaim the VAT on the rentals
No responsibility to dispose of the asset at the end of the term
Ability to return, re-lease or purchase the asset when the agreement ends