This is one of the most misunderstood reasons but certainly one of the most popular.
Equivalent cash purchases typically only deliver partial tax relief through the system of capital allowances and, where they qualify, enhanced capital allowances (ECA).
Although not relevant to public sectors that don’t pay tax, such as NHS, education and government, for example, it can be a game changer for profitable, private companies, subject to corporation tax or income tax as in the case of partnerships and sole traders.
The equation has become somewhat more nuanced over recent years after the government introduced the Annual Investment Allowance (AIA) in 2008.
Subject to certain caveats, the AIA does provide businesses with the equivalent of 100% tax relief on qualifying investments up to a set threshold each year, even when using capital.