The UK tax code has numerous reliefs and allowances that reduce tax when businesses invest in qualifying assets.<\/p>\n
Some of the reliefs allow up to 100% of the invested cost to be written off against taxable profits and companies can presently write-off 130% of qualifying expenditure.<\/p>\n
But aside from these tax incentives to invest, it is worth considering the bottom-line effect that the investment will have on business profitability.<\/p>\n
<\/p>\n
Cashflow considerations<\/strong><\/p>\n Companies, who can claim a 100% write-off for an asset purchase, will presently save £190 for every £1,000 spent – this based on corporation tax rates being 19%.<\/p>\n Self-employed traders will save between £200 and £450 for every £1,000 spent – based on income tax rates ranging from 20% to 45%. There may also be Class 4 NIC savings.<\/p>\n In both cases the cash outlay (or debt acquired to fund a purchase) exceeds any overall reduction in tax payable.<\/p>\n <\/p>\n Bottom-line mentality<\/strong><\/p>\n You may be tempted to upgrade an asset out of hubris. For example, part-exchange a company car. If the vehicle offers savings in running costs or enables you to increase sales and profits, then the investment – you could say – makes commercial sense.<\/p>\n If the payback in additional profits is less certain, then the investment return may be less certain even when after-tax savings are considered.<\/p>\n <\/p>\n Do the math…<\/strong><\/p>\n When making decisions on major additions or replacements of plant, vehicles or other high-value equipment, be sure to consider all the effects on your business prospects. Otherwise, your tax reductions may come at the expense of hard-won cash reserves.<\/p>\n We can help you crunch the numbers to see if there is an overall benefit to your business. Please call before making any significant buying decisions.<\/p>\n","protected":false},"excerpt":{"rendered":" The UK tax code has numerous reliefs and allowances that reduce tax when businesses invest in qualifying assets. Some of the reliefs allow up to 100% of the invested cost to be written off against taxable profits and companies can presently write-off 130% of qualifying expenditure. But aside from these tax incentives to invest, it […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-988","post","type-post","status-publish","format-standard","hentry","category-uncategorised"],"_links":{"self":[{"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/988","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/comments?post=988"}],"version-history":[{"count":0,"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/988\/revisions"}],"wp:attachment":[{"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/media?parent=988"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/categories?post=988"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/tags?post=988"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}