capital allowances

[Jo28]

there was a thread on here before regarding changes to capital allowances, cant find it. could someone point me in the right direction please.

cheers

 

[Yale]

Have a look at this page,may have been this thread.

Optimum hours to change

Go try and buy one for that !! - all brands seem to be holding good money as a result of new tractor price rise right now, not just fendt that's because there are less new tractors being sold so less tradeins available

thefarmingforum.co.uk

 

[goodevans]

Still £200,000 per annum so if you can spend that much and still live you haven't got too many worries

 

[redsloe]

Still £200,000 per annum so if you can spend that much and still live you haven't got too many worries

Yes, but be aware if your year end is in March you only have a 50k allowance from 1st Jan to 31st March. Could make a.big difference.

 

[farmerdan7618]

Was me that put a bit on there.

Reduce from £1m for 2020 calendar year to £200k for 2021 calendar year. Cost to change is the amount to look at for all but the largest of farms.

Is time sensitive to your year end, so if you have a March year end and spend £60k to change a tractor in February, you will only get £50k of allowances. Same deal in December, full allowances if you haven't already spent them.

Take advice before jumping on a deal, quick answer from your accountant can help cashflow a fair bit.

 

[Jo28]

Still £200,000 per annum so if you can spend that much and still live you haven't got too many worries

I wish

 

[Tarw Coch]

Was me that put a bit on there.

Reduce from £1m for 2020 calendar year to £200k for 2021 calendar year. Cost to change is the amount to look at for all but the largest of farms.

Is time sensitive to your year end, so if you have a March year end and spend £60k to change a tractor in February, you will only get £50k of allowances. Same deal in December, full allowances if you haven't already spent them.

Take advice before jumping on a deal, quick answer from your accountant can help cashflow a fair bit.

Do folk get too hung up on first year allowances?

Not that I’m ever likely to spend 200k per annum on plant and machinery but isn’t any over spend still claimable on reducing balance so tax relief is still available just over a longer time or am I misreading it?

 

[JonL]

Advice given here is not correct (by my understanding

if AIA rate changes part way through your accounting period you pro rata the allowance either side of the change and add them together. Eg March year end, allowance for YE 2021 is 9/12x1,000,000 + 3/12x200,000

 

[farmerdan7618]

Do folk get too hung up on first year allowances?

Not that I’m ever likely to spend 200k per annum on plant and machinery but isn’t any over spend still claimable on reducing balance so tax relief is still available just over a longer time or am I misreading it?

Sometimes yes, folk can get too hung up.

Yes, allowances still available on a reducing balance basis over the life of the kit. Never buy kit to reduce tax, but do time the purchases to get the cashflow benefits of the AIA.

 

[farmerdan7618]

Advice given here is not correct (by my understanding

if AIA rate changes part way through your accounting period you pro rata the allowance either side of the change and add them together. Eg March year end, allowance for YE 2021 is 9/12x1,000,000 + 3/12x200,000

Afraid not, that calculation gives you the maximum for the year, but it still needs to be in the relevant parts of the year - you won't get more than £50k for January to March, even if you didn't use the £750k for March to December.

 

[JonL]

Guidance

 

[farmerdan7618]

Guidance

Correct, see step 4 of example 1 - if the expenditure is after the fall in AIA it gets restricted to the allowance for that period.

Helpful advice though, thanks for posting the link

 

[JonL]

I stand corrected!

 

[farmerdan7618]

Well, after all the debate and consideration on the timing of purchases, HMRC has announced this morning that AIA will remain at £1m for 2021.

Nothing like moving the goalposts on kit purchases!