Tractor Purchase vs Hire

farmerdan7618

Member
Livestock Farmer
Location
Somerset
@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?
Happy to help, correct on depreciation canceling itself out and having no effect on tax.

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.
 

flywheel

Member
Location
wae up north
Big pack
Screenshot_20220223_215425_com.android.chrome.jpg
 
Tell me where you can hire a £150,000 tractor for ten grand per year ?

Fag packet figures for discussion purposes but even if it was £20,000 then that’s still £16,000/yr less than purchasing.
I had a hire price in August 21 of £17,500/year for 1000 hours/year and the purchase price of said tractor was £147,000.

However, it was a few years ago admittedly, we were paying £10,000/year for tractors sold at £130,000 at the time. we’ve also paid £10/clock hour for smaller tractors (150-160hp) for a 10 week hire period. This dropped to £8.50/hour for on farm all year around and 1500 hours per year. This is why we hired between 2006-2014. Then moved to a buy back guaranteed deal 2014-2018. Now complete opposite and would only buy a used tractor already depreciated as hire is now to expensive and new prices are just stupid unless your doing 2000 hours a year to make it stack up and swap every 2-3 years as warranties run out.
 

Spanish

Member
It has never seemed interesting to me to spend money on irons that are not needed with the sole intention of not paying the treasury. The best investment is to spend on one's own personal tastes, but of course I am Spanish.
To pay less taxes, a good option is to work less, but that is philosophy towards life and a forum is not a place for such extensive topics.

The rental has to be for punctual needs of power or temporary substitution of the own tractor, for the rest there is the organization, the imagination and a vitalist sense of existence. It is very long to explain and easy to understand, I think
 

Fendt820

Member
All I know is our last main tractor was a 2006 MF6465 which we bought new for £36'600 and sold in 2018 with 6000hrs for £21'000 with luckily no repair bills just servicing. A friend along the road had big repair bills in the past and his last 3 tractors of similar size to mine were on a 3 year hire up to 500hrs a year. All he had to do was put fuel in. His last deal which finished in 2018 was £10'000 a YEAR! £30'000 for 3 years and he only did 300hrs a year!
Not sure hire or buying new can be justified on those sort of hours really.
 

T Hectares

Member
Arable Farmer
Location
Berkshire
I’ve hired before but I’m confident that purchasing is a much better option, a 240hp tractor that I’ve just traded in has worked out at around £11/hr to own and maintain which is much less than the hire would’ve been, this cost included the warranty which has given insurance against major repair bills

Other than being cheaper it’s the flexibility that appeals from owning, with hire there will be a penalty for exceeding the set hours and tyre wear, this particular tractor was very good and I decided to keep it a bit longer which has just cost the depreciation for the year, whereas with a hire i would’ve been paying out a new agreement that would’ve increased, the capital allowance has been useful too so I’ve purchased its replacement

Interestingly, despite the increase in the cost of the new tractor, the trade in value has balanced this out and the cost to change and annual hp payments are the same as the previous one 5 years ago
 

SFI - What % were you taking out of production?

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Red Tractor drops launch of green farming scheme amid anger from farmers

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As reported in Independent


quote: “Red Tractor has confirmed it is dropping plans to launch its green farming assurance standard in April“

read the TFF thread here: https://thefarmingforum.co.uk/index.php?threads/gfc-was-to-go-ahead-now-not-going-ahead.405234/
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