bosses son
Member
Why do a lot of farmers prefer to buy shiny machinery rather than pay tax? At the same time some seem to live very modestly in their homes
Tax question
- Thread starter bosses son
- Start date
- Location
- Somerset
Often based on poor advice, the perception that kit will always reduce tax, and sales reps pedalling this advice - that's if the sole reason for buying kit is to reduce tax.
On the other hand, if the kit is needed, justified, or going to be beneficial to the business, then the upfront tax relief is just a bit of a bonus.
Timing of those purchases can help cashflow in a properly planned machinery replacement policy.
Buying kit is only a deferral of tax, your kit actually has to lose value for it to become an actual saving, and then it is only the tax on what it loses that is saved.
On the other hand, if the kit is needed, justified, or going to be beneficial to the business, then the upfront tax relief is just a bit of a bonus.
Timing of those purchases can help cashflow in a properly planned machinery replacement policy.
Buying kit is only a deferral of tax, your kit actually has to lose value for it to become an actual saving, and then it is only the tax on what it loses that is saved.
michael N123
Member
Make more sense to buy land and the machinery as you need it
There's been a bit of a theme going on for a while. Good sfp, buy a tractor to save paying tax. The son who doesn't want to milk goes "contracting" lugging spuds for £20 an hour. Dad's diesel tank bill goes threw the roof, and with payments to meet the son then moans farming is crap because dad's farm can't pay him a "proper" wage. At the end of it they're left with a high houred worn out tractor, all to save paying tax.
Sometimes new kit can save money in the long run by being more efficient and thus increase profits futher down the line, also it might get work done quicker so giving more time to enjoy family or reduce paid labour, why do people buy a new telly or sofa etc etc when the one they have is ok,is that any different,at least new kit might pay for itself long term,lots of reasons to replace kit some good some not
- Location
- South Wales UK
Scrap Subsidy and you won't need to worry about tax.
Losses will be NORMAL then and the Revenue will have to like it !
Losses will be NORMAL then and the Revenue will have to like it !
Some folk like to live modestly - even if they can afford to suffer from affluenza.
And what is wrong with buying a new bit of kit if it makes life easier - so long as it is treated well and looked after.
- Location
- South Wales UK
Try telling Public tax payers that reason for subs handouts ???
Please show me where depreciation is used as part of your tax calculations? You get Annual Investment Allowance when you buy (currently £200k) then pay tax if the income from the sale of the asset is part of a business profit.
https://www.gov.uk/capital-allowances
So what is wrong with farmers buying stuff to make their job easier?
Don't forget they are not farm subsidies,they are food subsidies which keep 'food' as in stuff you buy in a the supermarket cheap.
It's the consumer who benefit.
Probably because if we all went out of business the food wouldn't be there.
Nearly
Member
- Location
- North of York
In the unlikely event of my business paying tax at 40% I'd be buying machinery to get it down to 25% rate. I would be buying 10 or 20 year old stuff though, not putting money in the hands of the main stealers.
- Location
- Somerset
Depreciation is added back to your accounting profit, then capital allowances are deducted, along with various other adjustments to get taxable profit. What is on the accounts is not what will be on the tax return.
Same thing, sort of. I didn't know that depreciation was even submitted for tax accounts.
- Location
- South Wales UK
Different ways to look at it.
And we know what public think ?
Walterp
Member
- Location
- Pembrokeshire
There's a 'depreciation pool' calculation in the Return.
Return and Accounts should, ideally, be stapled together because of this.
- Location
- South Wales UK
That's why these "so called professionals" get away with what they do and we just as well ask the revenue in the start ?
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