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Is it a good time to start that project or buy equipment?

If your business needs investment and financially this is viable, there may never have been a better time to undertake substantial projects and to purchase plant and machinery from a tax saving perspective. HMRC have set the Annual Investment Allowance at its highest level since the allowance was introduced in April 2008. From the 1st January 2019 the AIA has increased to £1 million until 31st December 2020 and is proposed to reduce to £200,000 on 1st January 2021.

This means that farmers can spend up to £1 million on qualifying plant and machinery in each year and obtain 100% capital allowances in year one.

Due to the allowance having increased on the 1st January for a two year period, it would be advisable for businesses that have a year end that straddles this period to speak to their accountant to understand when they should be spending to make the most of any allowance available.

Qualifying assets need to be used by a business for the purpose of carrying out the qualifying business. This does not include stock or business premises. This includes, tractors, machines, tools, diggers as well as computers, office furniture and fixed equipment. Integral features in a new building may also qualify, which is appropriate for broiler units and egg production units. This is not a conclusive list, so if you are unsure whether the asset you’re purchasing will qualify, we would advise speaking to your accountant for confirmation.

If you would like to discuss AIA in more detail, please contact Roy Jackson, Agriculture Partner at Whittingham Riddell Chartered Accountants on rtj@wrllp.co.uk or call 01743 273273

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