- Location
- Somerset
Happy to help, correct on depreciation canceling itself out and having no effect on tax.@farmerdan7618 Thanks for your explanation. I think I am finally starting to get my head around it!
So even though depreciation is added back it doesn’t affect your tax liability because it has been previously entered as a business expense so in effect cancels itself out?
If I was to purchase a combine for instance that has a high price tag presumably the sensible way to deal with its capital allowance would be to spread it out at 18% over five? years instead of claiming all the capital allowance it generates in the year of purchase?
As for the high priced bit of kit, that depends on the profits you make, other kit you buy and how it is financed. More often than not it is better to claim in year one, but something your accountant should advise on based on your circumstances.