It’s a good time to look at buying equipment, says Danske Bank
Farmers and agri-businesses who have put off investment in plant and machinery over the past year should consider making acquisitions to take advantage of new government tax advantages which came into place at the start of April, according to Danske Bank.
To support business confidence, the UK government announced in November that the temporary increase in the Annual Investment Allowance (AIA) from £200,000 to £1 million, would be extended to 1 January 2022.
To further stimulate business spending, Chancellor Rishi Sunak then announced in the UK Budget a new capital allowance for businesses investing in qualifying plant and machinery. The ‘super deduction’ incentive effectively allows companies a reduction in their tax bill for every pound they invest in new equipment, creating a massive opportunity to grow in a cost-effective way. This scheme is in place until 31 March 2023.
Both schemes cover expenditure on qualifying plant, machinery, commercial vehicles, office equipment, IT and other items which are moveable, identifiable and are not part of the property.
Danske Bank said while it was prudent for many farmers to defer purchases of new machines last year due to the uncertainties caused by the coronavirus pandemic and the UK’s exit from the European Union, the new tax incentive presents an attractive reason to consider buying now.
Rodney Brown, head of agribusiness at Danske Bank, said: “After the year that many industries have experienced, with many sectors on hold for part of the year or operating on reduced capacity, purchasing new plant and machinery to grow their business perhaps hasn’t been a priority and might seem like a big step as we start to emerge from lockdown.
“Danske Bank wants to help Northern Ireland grow again, and for that to happen in the agri-food sector we know farmers need to invest in new equipment, such as tractors, combines and silage equipment. With new government tax advantages now in place, farmers should consider whether the time is right to start making those investments.”
Asset finance enables businesses to purchase the vehicles, plant and equipment that help them to do business, without having to pay for them in full on day one.
Danske Bank’s specialist Asset Finance team has been busy working with customers to plan ahead during the Brexit transition period and Covid-19 lockdowns, assisting businesses with investment in new and used capital equipment to help them improve, while preserving working capital.
The local six-person team has vast experience and covers the whole of Northern Ireland, working with businesses in a wide range of sectors, including haulage, transport, engineering and agriculture.
Richard Jennings, Asset Finance Regional Manager at Danske Bank, said: “The last year has been very challenging, so it was no surprise to see some plant and equipment purchases put off or deferred. We’ve made sure to keep close to our customers, offering repayment holidays, restructuring agreements and extensions when needed. We’re now starting to see demand coming back and interest in investment in new equipment ramping up again, including from the farming sector.”