It’s That Time Of Year…
Tax Planning and Capital Equipment Purchases.
by Steve Hadfield. Managing Director, Ranger Equipment Ltd.
This time of year is a busy one for me from a business planning point of view. With the year-end review, goal setting for the year ahead and of course the tax planning session with our accountants.
This got me thinking. You may be unaware of the all important ‘Annual Investment Allowance’ (or AIA, which is a major tax break for qualifying equipment purchases from the HMRC) and how you can leverage it to part fund a qualifying capital purchase. So, I wanted to raise your awareness and give you a couple of links you can click to learn more.
Now, I don’t profess to be a tax advisor or an accountant and here’s the obligatory disclaimer ‘I am neither of those and you must seek the relevant advice from your accountant and/or the HMRC’.
Heard of AIA yourself? Maybe not, but you should brush up on your knowledge, as there may be qualifying purchases that you are already making.
Assets that qualify for AIA include Motorcycles, lorries, trucks and vans, as well as equipment that you buy to use in your business such as plant, computer and office equipment etc.
However, you can’t claim AIA on the purchase of cars, items that have been gifted to your business and items you owned for another reason before you started using them in your business.
From 1 January 2016, the maximum value of capital purchases that you can write off in any period of account is £200,000.
This is a very generous investment allowance for Smaller Businesses and Limited Companies paying lower rate Corporation Tax. But consider Sole Traders and Partners who may be taxed on their business profits at higher rates (40% or 45%), they will be eligible to claim a maximum tax reduction of up to £80,000 (at 40%) or £90,000 (at 45%) against their taxable income.
Now consider, that tax saving could be applied to part fund a capital purchase for your business that you can fund via asset finance, thus leveraging your tax saving and spreading the cost of the investment. It’s HMRC way of supporting you investing in your business. Powerful stuff!
Planning for all of these issues needs to be carefully considered. Please consult your accountant and obtain the correct advice for your circumstances.
Finally, here are those links I promised you….
About Steve Hadfield
Steve Hadfield (Managing Director), founded Ranger Equipment Ltd in 1999 on the back of his Powered Access Industry experience gained since entering the industry in 1987. Having worked alongside both Mobile Crane and Access Platform engineers as a young trainee, he has gained a wealth of technical and engineering knowledge and uses this to focus on product support, a strong element of our business today. This background, plus his specific MultiOne product knowledge and loader experience are put to good use in his close working relationship with MultiOne CSF product development team in Italy.