Investing in new machinery and equipment can significantly enhance your business’s productivity, efficiency, and competitiveness – but did you know that there are tax incentives available to make this investment even more appealing?
With the Full Expensing policy, you have the opportunity to claim back 100% of the cost of qualifying plant and machinery all at once, allowing you to upgrade your infrastructure while saving a substantial amount.
In this blog, we’ll cover the policy in more detail and cover what this could mean for ambitious businesses like yours.
Full Expensing Explained
In short, Full Expensing is a tax policy that allows businesses to claim back 100% of the cost of qualifying plant and machinery all at once. It provides a significant incentive for businesses looking to invest in new machinery and equipment, as it allows them to deduct the full expense from their taxable income in the year of purchase.
Under traditional tax rules, businesses would typically depreciate the cost of machinery and equipment over several years, spreading the deduction across multiple tax periods – but with Full Expensing, businesses can immediately deduct the entire cost, providing a boost to their cash flow and offering substantial tax savings.
Qualifying for Full Expensing
So, how can you make sure you’re eligible for Full Expensing? Firstly, the machinery and equipment must meet certain criteria set by the tax authorities. Generally, qualifying assets include tangible assets used in the course of business operations, such as:
- Manufacturing equipment and machinery
- Office furniture and fixtures
- Computer systems and software
- Vehicles used for business purposes
- Construction equipment and tools
It’s essential to consult with a tax professional or accountant to determine if your planned machinery or equipment purchase qualifies for Full Expensing and how it may apply to your specific business circumstances.
Feel free to reach out to us if you’re unsure about whether you will qualify for Full Expensing.
3 Key Benefits of Full Expensing
Wondering what’s so special about Full Expensing? Well, in simple terms, the policy allows you to do a whole lot more without using up your capital. Below, we cover the 3 main benefits in more detail.
- Immediate Tax Savings: By claiming the entire cost of qualifying assets in the year of purchase, businesses can reduce their taxable income and enjoy significant tax savings. This can free up capital for further investments or be used to pay off loans.
- Cash Flow Advantage: With Full Expensing, businesses can preserve cash flow by deducting the entire cost of machinery and equipment upfront. This can be particularly beneficial for small and medium-sized businesses that rely on available funds to fuel growth and expansion.
- Enhanced Business Capabilities: Taking advantage of Full Expensing allows businesses to upgrade their machinery and equipment sooner, giving them access to the latest technologies, improved efficiency, and increased productivity. This, in turn, can drive business growth and competitiveness.
Full Expensing Vs Super-Deduction: What’s The Difference?
When it comes to tax policies for machinery and equipment investments, another term you may come across is ‘super-deduction’. While this also offers tax benefits, there are some key differences to consider between this and Full Expensing.
- The super-deduction tax policy allows businesses to claim 130% of their qualifying machinery and equipment costs as a deduction from taxable profits. This means that for every £1 spent on qualifying investments, businesses can deduct £1.30 from their taxable profits.
- Full Expensing, on the other hand, allows businesses to claim back 100% of the cost of qualifying plant and machinery investments all at once. This means that businesses can immediately deduct the entire cost of their machinery and equipment purchases from their taxable profits. The Full Expensing policy provides businesses with a faster and more immediate tax benefit compared to the super-deduction scheme.
While both super-deduction and Full Expensing offer tax benefits for machinery and equipment investments, the main difference lies in the timing of the tax relief. With the super-deduction scheme, businesses can benefit from a higher percentage deduction over multiple years, whereas Full Expensing allows for an immediate deduction of the entire cost.
Maximising Your Tax Benefits with Aurora Capital
As mentioned previously, with the Full Expensing policy you can enjoy significant tax benefits when purchasing qualifying plant and machinery. By claiming back 100% of the cost all at once, you can save a substantial amount that can be reinvested into your business or used to pay off your loan.
At Aurora Capital, we understand the importance of seizing such opportunities to drive your business forward. That’s why we offer a comprehensive range of loans tailored to meet your specific needs, empowering you to make the necessary investments in your business’s growth and success.
Our Range of Business Loans
- Unsecured Business Loan: Access hassle-free financing without the need for collateral, enabling you to acquire new machinery or equipment quickly and efficiently.
- Secured Business Loan: Leverage your valuable assets, such as property or existing equipment, to secure a larger loan amount at competitive interest rates, providing the necessary funds for significant upgrades.
- Asset Finance: Acquire or lease essential assets with a loan secured against the purchased equipment, spreading the cost over a period that aligns with your business’s cash flow.
- Invoice Finance: Optimise your cash flow by accessing funds tied up in unpaid invoices, allowing you to invest in machinery and equipment without compromising your working capital.
Invest in Your Business’s Future Today
Don’t miss out on the opportunity to upgrade your business infrastructure and maximise tax benefits with Full Expensing!
With our range of business loans and access to 50+ lenders, we provide the financial support you need to make your vision a reality. Take advantage of our flexible repayment terms, competitive interest rates, and personalised solutions to propel your business forward.
Contact us today to discuss your financing needs and discover how Aurora Capital can help you unlock your full potential.
