If you are buying a new piece of equipment for your farm, it is important to consider whether your existing building is large enough to house it, and if not, whether a new building is required or if the building can be extended. Before undertaking a building project you should consider what tax reliefs are available, as this could potentially reduce the overall cost of the project.
It is possible to claim for alterations to farm buildings providing that they were integral to the installation of the plant, for example, housing a new bulk tank. In order for a building alteration to qualify as part of the installation costs of plant and machinery, it must remain identifiable as a separate structure from the building. It is important to obtain invoices from contractors and suppliers for the separate elements of the work.
The plant and machinery itself may qualify for capital allowances and 100% tax relief up to £500,000 per annum (between 1 April 2014 and 31 December 2015), and any balance remaining will qualify for writing down allowance at 18% per annum on a reducing balance basis.
Furthermore, integral features included in the construction can also qualify for the annual investment allowance (AIA), or, if that is fully utilised, an 8% writing down allowance per annum. Integral features are those such as: an electrical system (including lighting system), a cold water system, a space or water heating system, a powered system air ventilation, external solar shading etc.
Any energy saving equipment that is purchased is likely to qualify for 100% AIA along with the costs of installation. See here for a full list of items that qualify.
If you are thinking of constructing a new building associated with your farm or extending an existing farm building(s) please contact Green & Co for further help and advice.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.