JCB Finance, the asset finance arm of the United Kingdom-based construction and demolition equipment manufacturer, is urging businesses in the industry to act now to take advantage of a valuable temporary tax relief announced in the government’s autumn 2018 budget.
Chancellor Philip Hammond used his latest financial summary to increase the Annual Investment Allowance (AIA) limit – for expenditure on plant and equipment – from £200,000 (US$255,000) to £1 million ($1.3 million).
However, the allowance will revert to £200,000 at the start of 2021 and JCB Finance says eligible companies need to talk to their accountant now to maximise on any available tax relief.
“This important tax incentive allows 100% tax relief in the first year and is designed to encourage businesses to invest in plant, machinery, commercial vehicles and a broad range of other assets,” said JCB Finance managing director Paul Jennings.
“Depending on the business’ rate of tax, it is an open invitation to invest in plant and machinery and secure the equivalent of a 19% to 45% subsidy. Better still – if you acquire the plant via a hire purchase agreement the acquisition, for tax purposes, is treated as if cash had been paid. Plus any interest payable is tax deductible too.
“However, different financial year ends will affect the proportion and timing of expenditure. Getting the timing and the amounts right is crucial to your business.
“We are already recommending to our customers that they speak to their accountant now, so they can plan the optimum time to take delivery of their machinery.”