Equipment Hire, Machine Maintenance & Leasing: Codes 7700, 7701, 7702 & 7703

Not every piece of equipment a business uses needs to be owned outright — hiring, leasing and maintaining equipment are all treated as running costs rather than fixed asset purchases.

The codes, and what each one holds

Code 7700 — Equipment Hire records short-term hire of tools or equipment for a specific job.

Code 7701 — Office Machine Maintenance covers servicing and repair contracts for office equipment like photocopiers.

Code 7702 — Equipment Leasing and Code 7703 — Leasing Costs both cover longer-term lease arrangements for equipment, where the business pays regularly to use equipment it doesn't own. All four are Overheads codes and normally carry a debit balance.

Real-world examples across industries

Construction

Hiring an excavator for the duration of a job — short-term and tied to that specific contract's costing — is a classic 7700 (Equipment Hire) entry: a week's excavator hire at £2,400 (£2,000 net) is a debit of £2,000 to 7700, a debit of £400 to 2201, and a credit of £2,400 to 2100 (Creditors Control Account). Where the same firm instead takes a telehandler on a rolling monthly contract because it's needed on every site rather than one job, that's a longer commitment and belongs in 7702 (Equipment Leasing) instead: a £1,860 monthly invoice (£1,550 net) is a debit of £1,550 to 7702, a debit of £310 to 2201, and a credit of £1,860 to 2100. The distinction matters because hire costs come and go with individual jobs, whereas a lease represents an ongoing commitment regardless of what work is on at the time.

Office-based professional services

A firm's photocopier service contract often has two parts — a fixed base fee plus a variable "click charge" based on pages printed — so the quarterly total moves with usage: £636 (£530 net) is a debit of £530 to 7701 (Office Machine Maintenance), a debit of £106 to 2201, and a credit of £636 to 2100. The same office occasionally hires an extra projector for a client presentation — a small, genuinely one-off cost rather than an ongoing contract: £120 (£100 net) is a debit of £100 to 7700 (Equipment Hire), a debit of £20 to 2201, and a credit of £120 to 2100. Keeping the two apart shows how much of equipment spend is a fixed running cost versus the odd occasional hire.

Field sales team versus IT consultancy — the leasing VAT catch

A recruitment agency leases company cars for its consultants under contract hire. Because the cars are available for private use, HMRC generally restricts recovery of VAT on the finance element of a leased car to 50% — the other half simply can't be reclaimed and gets added to the cost instead. A quarterly invoice of £2,400 (£2,000 net, £400 VAT) is a debit of £2,200 to 7703 (Leasing Costs — the £2,000 net cost plus the £200 of VAT that's irrecoverable), a debit of £200 to 2201 (the recoverable half), and a credit of £2,400 to 2100. An IT consultancy leasing laptops and servers under the same code hits no such restriction, since the equipment carries no private-use element: a £600 monthly invoice (£500 net) is a straightforward debit of £500 to 7703, a debit of £100 to 2201, and a credit of £600 to 2100 — full recovery, unlike the car lease next door.

Why this matters day to day

Distinguishing short-term hire from ongoing leases matters because leases run for a fixed term and represent a longer commitment, whereas hire costs come and go with individual jobs. Keeping maintenance contracts in their own code also helps flag when equipment is getting expensive to keep running — sometimes a signal that replacing it is more cost-effective than repeatedly repairing it.