Advertising feature Act quickly to beat the VAT increase
The seemingly never ending stream of bad news regarding the economy and gloomy predictions are undoubtedly causing businesses to look closely at any capital expenditure.
A natural reaction, and with the year-end fast approaching, is that some may be postponing any pur- chases until a clearer picture emerges. This will, however, mean that a pur- chase made next year will attract the new increased standard rate of 20 per cent for VAT, from 4 January 2011. On a £10,000 purchase, this equates to an additional cost of £250 – not huge, but better in your pocket than that of HM Revenue & Customs. Making a purchase simply to save tax is never good practice, but if the purchase is planned and required, it would make sense to bring this for- ward to 2010. But hurry, as suppliers will be low on stock at this time of the year and HMRC have made it clear
that they will take a dim view on any sharp practice as they see it where invoices have been provided at the 17.5 per cent rate for deliveries which will knowingly take place at some unspecified date in the future. If you are considering a purchase, there is also some good news on the tax front. Up to £100,000 of capital expenditure may qualify for 100 per cent tax relief in the year of purchase. This is the annual investment allowance and will substantially reduce your tax liability for your cur- rent tax year. This annual investment allowance incidentally reduces to £25,000 from April 2012 so this should be factored into next year’s spending plans as well.
Speaking of tax, 31 January 2011 is a date viewed by many businesses with a degree of trepidation as it is the deadline for income tax to be paid. With December often a poor month in
Above: David Foster, Managing Director, Braemar Finance
terms of cash flow, this can cause tem- porary difficulties for many practices. There may also be a reluctance to approach your bank to extend facilities. Braemar Finance can provide tax loans over a short term – usually six to 12 months – to assist with practice cash flow. They are quick and simple to arrange and may well prevent any penalties that HMRC will levy for late payments of your tax liability. Paying tax is unavoidable, but by maximising available tax relief, and taking advantage of the current rate of VAT, you can take comfort in the fact that you are minimising your personal contribution to the Government budget deficit.
® For more information on Braemar Finance, phone 01563 852100, fax 01563 852111 or email info@braemar
finance.co.uk
Scottish Dental magazine 59
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