Tax Allowances for Caravans Used in the Business

Tax Allowances Caravans.jpg

You can claim tax relief, known as capital allowances, for plant and machinery that you keep to use in your business. Assuming all criteria are met, the cost of items such as tools, equipment, desks and computers can be offset against profits in the year in which they are incurred. This is subject to the annual investment allowance which is currently £200,000.

You cannot however claim capital allowances for assets in or on which the business is carried out. This includes land, buildings and other related structures.

This distinction is important when determining whether capital allowances are available for something such as a caravan. Although a caravan would typically be considered an asset in which the business is carried out, if it is intended to be moved around in the course of the qualifying activity then there may be an opportunity to claim capital allowances. HMRC guidance, however, focuses on caravan sites so there is some ambiguity with regard to the use of caravans in other trades.

Somewhat by contrast, farmers can claim tax relief on a caravan used to house a farm employee, even if it occupies a fixed site and is used solely for residential purposes (which could make for a few happy campers). However, if you are going to make such a claim, it is advisable to check  with your tax advisors beforehand in regard to your specific circumstances.

If you have any questions or comments please contact Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.


Paw-fect Tax Savings!

Did you know your canine could be a K9?!

Dogs can be a great way to save most farmers and other businesses tax!

Generally, farm animals take the form of cattle, sheep or chickens, which would either be recorded in farmers’ accounts as stock or a capital asset. To be classed as a capital asset, the animal would be kept for what it produces while it is still alive, for example milk, wool or eggs. With this in mind, how would you account for your dog in your business and where are the tax savings?

Most dogs kept by farmers are working dogs, such as a sheepdog , which work on the farm but do not ‘produce’ anything, as such. These dogs are recorded as capital assets and are eligible for capital allowances which reduce your tax bill. There are additional tax savings to be made though, as expenses for caring and loving your dog, such as food, veterinary bills, insurance, etc. are all tax deductable.

In many cases, the working dog has a number of job titles on the farm, which could be extended to guard dog for the home, or the family pet. If this is the case, part, or maybe all of the costs related to the dog may be disallowed for tax. This is an area which the accountants at Green & Co are well equipped to help you with.

For additional information and advice on introducing animals to your business, please contact Green & Co on 01633 871122.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Do You Want To Get Maximum Tax Relief For Your Vehicles?

There is a significant difference, for tax purposes, in vehicles classed as cars by HMRC and those classed as commercial vehicles.

Cars with  CO2 emissions of 95 or less will attract a 100% write off in the first year, but most will only receive capital allowances of 18% each year on a reducing basis. Worse still, those cars with CO2 emissions of 131 or more will only get 8% relief. Commercial vehicles, on the other hand, are classed as plant and machinery and are therefore able to form part of the annual investment allowance (currently £500,000).

So what is a commercial vehicle? You would be forgiven for thinking that this is pretty obvious, however such is not the case! Take, for example, a double cab pick up. The definition of a car is a mechanically propelled road vehicle, other than:

  • a vehicle of a construction primarily suited for the conveyance of goods or burden of any description
  • a vehicle of a type not commonly used as private vehicles and unsuitable to be so used.

Clearly, a double cab pick up can be used to transport goods but at the same time is also commonly used as a private vehicle. So is it a car or is it a commercial vehicle classed as plant and machinery?

The fact that the Dealer’s invoice shows the vehicle to be commercial does not mean that HMRC will treat it as such. However, when all factors relating to their construction are taken into account, a number of vehicles within this category do have a predominant purpose of carrying goods or burden. Each case will depend on the facts and the exact specification.

As a general rule of thumb for double cab pick ups only, HMRC accept that if the payload exceeds 1 tonne (1,000kg) it would be classed as a van.

The other main vehicle which causes similar problems is the Landrover. Again, the construction of the vehicle will be all important – are there rear seats, windows, etc? If so, HMRC will argue that it is a car rather than a van.

Clearly, if you wish to maximise tax allowances careful thought has to be given when purchasing vehicles of this nature. Should you require any further assistance please do not hesitate to contact Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Renewable Energy – Making Farming Greener

Historically, farmers have provided for the population by producing the basic necessities of life such as food and clothing materials.  In modern times, energy is the most precious  and yet essential of commodities, so it seems only natural that the evolution of farming should include the supply of renewable energy.

From  hosting wind farms and solar panels to the installation of  anaerobic digestion systems, farms are the perfect vehicle for continuing the re-invention of the word “green”. With recent poorer harvests and the adverse economic climate, investing in renewable energy projects can make good use of both available land and farming by-products, and can offer a more secure source of income.

Solar panels are an important option but factors such as location, the lie of the land, planning permission, visual impact and possible local objections should be considered. These could all affect the value of the investment and subsequently your return.

There are financial issues and tax implications which need to be considered and advice should always be sought from an Accountant before entering into any agreement. For instance, it is very important that any land used for renewable energy of any kind retains its agricultural status,  otherwise the entitlement to Agricultural Property Relief may be lost when the land is disposed of or bequeathed, and this could raise issues with Inheritance Tax.

The cost of the solar panels will normally qualify for capital allowances and you can get tax relief of up to £500,000 from 1 April 2014.

Any income received will be taxable as business income unless it comes from leased land, in which case it will be taxed as rental income. It’s also important to remember that any energy sold to the National Grid attracts output VAT and must be included in returns and paid over to HMRC in the same way as any other taxable supply (although the Feed-in-Tariff is exempt).

Should you require any further information or advice please do not hesitate to contact Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.