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Claiming for a piece of machinery paid for with a loan.

Posted by Harry@VWGS on March 2, 2016 at 12:17pm in Machinery
i have never brought a machine on loan, but was asked this morning by a gardening friend how do you claim for it through your books? I had no answer as my accountant takes care of any technicals in my accounts, but I said I'd ask. Do you claim for the repayments you make or the initial full cost of the machine? I told him to just save the money and buy the machine but he's impatient and business waits for no man apparently... Many thanks Harry
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Replies

  • PRO
    Harry@VWGS March 2, 2016 at 4:49pm
    All good, thought I'd may as well just give my accountant a bell and he has explained everything, many thanks everyone...
    • Graham Wright > Harry@VWGS March 2, 2016 at 6:08pm

      Was it that you claim for the purchase as introducing capital into the business, and claim in one go? Just wondering as I bought a hedge trimmer on a credit card this year.

      • PRO
        Harry@VWGS > Graham Wright March 2, 2016 at 7:08pm
        it depends on a couple of things, 1/ will it last less than two years, 2/ are you paying c/c bill straight away, 3/ how much you earn each year 4/ is it solely for business use? Gets a bit more complicated with a really expensive piece of machinery like a £15,000 ride on, but with a machine like yours then just claim in one go mate.
  • PRO
    Gary RK March 2, 2016 at 6:21pm

    There's normally a notional threshold (£500 or £1000 from memory) after which it generally gets classified as an 'fixed asset', offset aganst any AIA and depreciated - normally straighlined.

    Anything less is normally 'Expensed' and offset against income.

    If VAT registered, it can be reclaimed in both cases but differerntly if an Asset. If bought on loan (CC, HP etc) your Accountant will advise how best to account for it above or below the 'line' dependant of type of credit.

    Two great books I'd recommend - The FT Business Startup Guide (current edition) or the old Lloyds Bank Small Business Guide (no longer produced so some content is out of date, but the explanations and examples are still valid...and available from Amazon 2nd hand for 1p !!!!)

     

    • Graham Wright > Gary RK March 2, 2016 at 8:10pm

      Cheers guys, I was thinking along the right lines then. I think I bought The FT Business Startup Guide last year, and never read it. Might have to dig it out. I do a lot of charity shop book searching :)

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