Depends on the rate of tax you are paying. But don’t forget you will have a saving this year and then next year all the depreciation on that machine will be added back to taxable profit that you will have to pay on. There’s no free lunch
Machinery dealers/manufactures, have they lost touch with farming reality?
- Thread starter An Gof
- Start date
Depends on the rate of tax you are paying. But don’t forget you will have a saving this year and then next year all the depreciation on that machine will be added back to taxable profit that you will have to pay on. There’s no free lunch
- Location
- Darlington
Gosh, I must be a lousy business man, I just bought a new tractor because I wanted to and could afford it 
I must be an even worse business man, i would like a new tractor, but can't afford one.Gosh, I must be a lousy business man, I just bought a new tractor because I wanted to and could afford it
Depends on the rate of tax you are paying. But don’t forget you will have a saving this year and then next year all the depreciation on that machine will be added back to taxable profit that you will have to pay on. There’s no free lunch
Remember going to accountant one year to review accounts and his opening line was The good news is we’ve managed to keep you in the lower tax rate bracket.
Towards the end of the meeting he discovered they hadn’t added on the depreciation
Buying a new machine to save tax only works if you can do it every year. Year you stop is when depreciation catches you up.
Subs going will solve this “problem” many have
Ali_Maxxum
Member
- Location
- Chepstow, Wales
While I agree to a degree with the thread title, is it not more to do with farming hasn't kept up with 'reality'? Without going all philosophical what is reality really?
It's a horrible vicious cycle this machinery buying/ownership, etc.... I don't think there's any right or wrong way of doing it, you do whatever suits you and your business and whatever else you've got going on.
Machinery prices are beyond horrific but then returns/rates for what we are getting for our goods/services have barely moved the last 20years??
It's enough of a job trying to keep going never mind being a business trying to progress and grow. You chip away changing this and that and stepping up a bit and getting all your kit up together, think you're nice and level, but then you go to change or add something big and think oh its ok a lot of stuff is paid off, and by the time your next big thing is paid off you have a lot of kit that will be 10+yr old and that will be up for change....
Why don't I fix it up and keep it going? Tried that, been there, got the t shirt, once it starts becoming a frequent and expensive PITA it's time to go! While that's fine for some it's not for others, simple as that.
However with prices of kit the way we are, we are looking at keeping longer, or adding more to share the workload/use as back up.
It's a horrible vicious cycle this machinery buying/ownership, etc.... I don't think there's any right or wrong way of doing it, you do whatever suits you and your business and whatever else you've got going on.
Machinery prices are beyond horrific but then returns/rates for what we are getting for our goods/services have barely moved the last 20years??
It's enough of a job trying to keep going never mind being a business trying to progress and grow. You chip away changing this and that and stepping up a bit and getting all your kit up together, think you're nice and level, but then you go to change or add something big and think oh its ok a lot of stuff is paid off, and by the time your next big thing is paid off you have a lot of kit that will be 10+yr old and that will be up for change....
Why don't I fix it up and keep it going? Tried that, been there, got the t shirt, once it starts becoming a frequent and expensive PITA it's time to go! While that's fine for some it's not for others, simple as that.
However with prices of kit the way we are, we are looking at keeping longer, or adding more to share the workload/use as back up.
Bossfarmer
Member
- Location
- between Perth and Inverness
curious to work out whether to shift any more machinery this year or wait until next
Bossfarmer
Member
- Location
- between Perth and Inverness
how do you mean depreciation catches you up?Remember going to accountant one year to review accounts and his opening line was The good news is we’ve managed to keep you in the lower tax rate bracket.
Towards the end of the meeting he discovered they hadn’t added on the depreciation
Buying a new machine to save tax only works if you can do it every year. Year you stop is when depreciation catches you up.
Subs going will solve this “problem” many have
Bossfarmer
Member
- Location
- between Perth and Inverness
thats a fair point by that you mean say theres 10k depreciation thats added to my taxable profit wheras if i kept going with the older tractor id have repairs instead which are tax deductable?Depends on the rate of tax you are paying. But don’t forget you will have a saving this year and then next year all the depreciation on that machine will be added back to taxable profit that you will have to pay on. There’s no free lunch
Capital allowance is, in effect, only deferred tax liability.
I’m a bit flummoxed, is it the same people saying farm income hasn’t kept up with the rest of the country who are buying machines to save tax? The reality is those on high salaries are paying a lot of tax.
On tax liability.
First thing accountant does (or should!!) is add depreciation back on to your profits.
Big new expensive machine bought this year will lower tax due this year but it’s depreciation gets added onto next years profits for tax.
Bossfarmer
Member
- Location
- between Perth and Inverness
if you buy a 2nd hand bit of kit though you save tax and theres less depreciation the next year? or you just change a few things each year, on a mixed farm you really need to be shifting kit each year to keep everything up, could take 15yrs to get round everything
Kildare
Member
- Location
- Kildare, Ireland
You tax problems too[emoji1]
primmiemoo
Member
- Location
- Devon
Northeastfarmer
Member
- Location
- Cleveland
They’ll do 20k hours no bother if you’re prepared to treat them like triggers brush...
Pigs, potatoes, combinables, bit of contracting, average 6500hrs across the fleet each year
90hp farming
Member
Regarding ever increasing machinery costs.......
When will we reach the point at which it is more cost effective to replace all the fancy massive tackle with a yard filled with some friendly staff and a fleet of massey 135s.
the really lucky farms could have an international 1455 or even a 55 series John Deere to pull the direct drill.
well on the way to regenerative farming: socially, environmentally and economically?
When will we reach the point at which it is more cost effective to replace all the fancy massive tackle with a yard filled with some friendly staff and a fleet of massey 135s.
the really lucky farms could have an international 1455 or even a 55 series John Deere to pull the direct drill.
well on the way to regenerative farming: socially, environmentally and economically?
- Location
- Northumberlandia
Thats what i was going to say..... ive not seen this depreciation hit me the year after in a taxable way that some are saying, mind you as pretty much with most farmers reaching these lovely profits year after year is pretty much a dream, i recon 7/10 years ive been like that but have plenty other things to deduct that income tax death nell anyways.
5 year profit averaging saved me income tax alone not that long ago.
Good Accountants worth every penny thats all iam saying.
Bossfarmer
Member
- Location
- between Perth and Inverness
out of interest, depreciation is a cost to running a business so whys it added onto profit?