With the money expended by most farms on plant and machinery, it will be important for farmers to be able to claim such costs under the annual investment relief in order to obtain a 100% tax write off in the year of purchase.
When planning such expenditure, there are various points which need to be considered:
The timing of the expenditure
When is the accounting year end and what other plant and machinery has been purchased in the financial year? This is extremely important when the rate of the annual investment allowance changes during the year.
What is the actual date of purchase?
This depends on whether an asset is purchased outright or bought with extended payment terms, as if there is more than 4 months credit allowed, the expenditure is not incurred until the date on which payment is required to be made.
What entity is purchasing the plant?
Partnerships with non-individuals as members are not entitled to the allowance.
Where the annual allowance has been fully utilised, the tax allowance is restricted to 18%, and for items classed as integral features (such as electrical and cold water systems) the allowance is a meagre 8%.
Green & Co have a wealth of experience in helping farmers maximise their capital allowances and reduce their tax. For more information, please contact us.