100% tax relief is now available on eligible purchases like JCBs, plant, equipment, and commercial vehicles – offset against taxable profits via either the Annual Investment Allowance or Full Expensing, permanently.
Available on purchases made using Hire Purchase
You can claim the Annual Investment Allowance and Corporation Tax full expensing relief on qualifying assets placed on Hire Purchase just as if you had paid cash; enabling you to preserve working capital, choose payment terms to suit your business and save the tax – even if only the deposit has been paid!
Annual Investment Allowance (AIA) – Up to £1 Million Tax Relief
The Annual Investment Allowance (AIA) is a type of capital tax allowance that offers 100% tax relief on qualifying capital expenditure in the year of purchase. Expenditure on business assets (e.g. plant and commercial vehicles) per year is 100% allowable against taxable profits of a business, deductible in the year that you buy them. This accelerates the tax relief rather than the tiered writing down allowances (WDA) normally applied over several years. Effectively a business can save £1 in taxable profits for every £1 spent on eligible purchases.
This £1 million per year tax relief is available for qualifying expenditure – but the exact amount you can claim is based on eligibility and the timing of the purchase in relation to your financial/tax year end.
Most assets claimed for business use qualify including: excavators, telehandlers, tractors, combines, loading shovels, sprayers, and commercial vehicles. Cars cannot be claimed under this scheme.
Expenditure is usually pooled rather than specific items being handled separately and any eligible purchases beyond this £1 million limit would still be eligible for the standard writing down allowances.
Spread the payments and preserve working capital
Claim the AIA against qualifying assets placed on Hire Purchase (HP) – just as if you had paid cash. You can enter into a Hire Purchase agreement for qualifying assets and benefit from the relief prior to all the payments of the agreement being made, in addition to the normal cash flow benefits of using Hire Purchase
Corporation Tax Full Expensing – Unlimited Tax Relief on 100% of your Investment
Unlimited investments made by companies in qualifying new plant and machinery will qualify for a 100% first-year allowance for main rate assets like JCBs, plant, equipment, and commercial vehicles. This means companies across the UK will be able to write off the full cost in the year of investment, known as full expensing.
Expenditure on plant or machinery for leasing (likely to include non-operated plant hirers) is excluded from first-year capital allowances and cars are not eligible. In any event, speak to your accountant or tax advisor for guidance if qualification for the relief is essential to your purchase decision.
Rossetts Commercials is not a tax advisor or financial advisor; always seek advice from your accountant or finance director because every business’s circumstances are different. Businesses should not make investment decisions purely on a tax basis; there should be a compelling business case for the investment. UK business users only; terms apply.