Loans, Hire Purchase & Mortgages: Codes 2300, 2310 & 2330

Borrowing that will take more than a year to pay off is treated differently from everyday trade credit — it sits in its own Long-Term Liabilities section of the balance sheet, split by the type of borrowing.

The codes, and what each one holds

Code 2300 — Loans records general long-term borrowing, such as a bank loan taken out to fund expansion or working capital.

Code 2310 — Hire Purchase records the outstanding balance owed on assets being bought under a hire purchase agreement, where the asset itself is already shown in Fixed Assets.

Code 2330 — Mortgages records borrowing secured against a property the business owns. All three are Long-Term Liabilities codes and normally carry a credit balance.

Real-world examples across industries

Construction and groundworks

A groundworks contractor acquires a £45,000 excavator on hire purchase, paid off over five years — a debit to a fixed asset code for the equipment and a credit of £45,000 to 2310 (Hire Purchase), recognising the asset and the liability together. Separately, it draws a £25,000 bank loan to fund working capital between contracts, a credit of £25,000 to 2300 (Loans) and a debit of £25,000 to 1200 (Bank). No VAT applies to either financing transaction. Contractors running several HP agreements across a plant fleet typically keep a subsidiary schedule per asset rather than relying on one lump 2310 balance.

Owner-occupied trading premises

A business buys the freehold of its workshop rather than renting, taking out a commercial mortgage of £180,000 — a debit of £180,000 to a fixed asset code for the property and a credit of £180,000 to 2330 (Mortgages), again with no VAT since the sale of land and buildings is normally exempt unless the seller has opted to tax it. The same business separately draws a smaller £15,000 bank loan to fund new equipment, credited to 2300. Mortgages tend to run far longer than an equipment loan — 15 to 20 years against 3 to 5 — so the two balances behave very differently even though the accounting mechanics are identical.

Smaller service business, one agreement only

A dental practice finances a single significant item — a new treatment chair worth £8,000 — on a three-year hire purchase agreement, a debit to the equipment code and a credit of £8,000 to 2310. That's the only long-term borrowing on the balance sheet: no bank loan, and premises are rented rather than owned, so 2300 and 2330 both stay at nil. With just one agreement running, the balance is easy to reconcile directly against the finance company's statement without needing job-level tracking the way a construction fleet does.

Why this matters day to day

Separating long-term borrowing from short-term trade creditors gives a much clearer picture of the business's financial structure — a bank or investor looking at the balance sheet wants to know how much debt is due soon versus stretched over several years. Keeping loans, hire purchase and mortgages in separate codes also makes it far easier to check each one against its own repayment schedule.