The UK Government recently launched 'Full Capital Expensing'; a new tax incentive designed to encourage business investment.

This Capital Allowance enables construction firms to fully write-off the cost of qualifying purchases in the same year the asset was purchased. This equates to a saving of 19% or 25% of the asset’s purchase price (depending on your tax rate). The allowance can be claimed on a wide range of equipment by incorporated businesses, with the Annual Investment Allowance accessible under similar rules by unincorporated businesses.

This means you can get that new plant, equipment, delivery vehicle, or refurbish your office, at a significant effective discount.

For example, a builder buying a mini-digger for £15,000 plus a van at £35,000 would deduct £50,000 from their company profits and pay Corporation Tax on the remainder. At a 19% Corporation Tax rate, the company would now pay £9,500 less tax, a saving equivalent to 19% of the purchase price.

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For businesses who prefer to spread costs, a business loan or a hire purchase agreement allows firms to claim the full expensing allowance.

The government uses the term ‘plant and machinery’ to denote items that qualify for the allowance, which must all be new, but in reality, this covers a wide range of purchases:

• Items that you keep, to use in your business.

• Costs of demolishing plant and machinery.

• Parts of a building considered integral.

• Some fixtures including kitchens, bathrooms, air-con and alarms/cctv.

• Building alterations required to install plant and machinery.

• Vehicles for moving goods (but not cars).

Portman Asset Finance is both a lender and a broker, able to provide both hire purchase agreements and business loans, methods that allow capital allowances to be claimed. We have been helping construction firms spread the cost of new equipment and cover unexpected operational costs since 2007.

Portman also provide finance leasing, short term and flexible loans as well as tax loans and equipment refinance, helping construction businesses boost cashflow or capture opportunities in today’s challenging environment.

If you’re looking to fund new equipment, refurbish your premises or boost cashflow, talk to the experts at Portman.

Call: 01604 669343 or click here.

We always recommend talking to your tax accountant before making large equipment purchases.