paulears Posted October 17, 2011 Share Posted October 17, 2011 I went to see my accountant today, and they mentioned a new HMRC rule. I'm not sure if other self-employed people do this, but when I'm faced with having 'spare' business funds, I tend to re0invest it in more equipment as below £100,000 you could claim 100%. Pretty popular with many businesses as they buy a new JCB or tractor, or lighting desk. From April this changes to a four year period, where you claim 25% in the first year, then 18% in the second on a reducing basis. Essentially, the revenue have decided that they're losing too much with the current system - hence the change. Anybody else know any more details - before I attempt to find the info on the Gateway? Link to comment Share on other sites More sharing options...
Junior8 Posted October 17, 2011 Share Posted October 17, 2011 The Annual Investment Allowance will remain but limited to £25,000 - info here. HMRC update here You can still claim 100% capital allowances on plant etc up to £25k in a tax year, the rest goes on to the four year system. Link to comment Share on other sites More sharing options...
cfmonk Posted October 31, 2011 Share Posted October 31, 2011 £25K isn't that much at all though. You really would think that given the current outlook the government would be trying to adopt fiscal policies which would encourage investment rather than saving.... strange! Link to comment Share on other sites More sharing options...
Pete McCrea Posted October 31, 2011 Share Posted October 31, 2011 You'd think wouldn't you.... Turns out a friend of my parents is part of the government think tank that comes up with the ideas to stimulate the economy. When I heard that, I was already to let rip with a few ideas. Link to comment Share on other sites More sharing options...
dbuckley Posted October 31, 2011 Share Posted October 31, 2011 You really would think that given the current outlook the government would be trying to adopt fiscal policies which would encourage investment rather than saving "Encourage investment" (in equipment) is almost always code for "go into debt for". The UK has way too much debt. Link to comment Share on other sites More sharing options...
Pete McCrea Posted October 31, 2011 Share Posted October 31, 2011 But is there a problem where debt is manageable? Having debts as opposed to being in debt? As a business we want to start moving in slightly different product ranges, and for us it means either working for years to save the cash to buy the kit, and paying money into other companies banks while we sub hire it, or paying the money into our banks pockets via a finance company that enables us to own the product. Much as I have issues with the banks, I'd rather not be prospering a competitor... Whilst I'd much rather buy kit out right, I believe that finance will always make up an element of purchasing mechanism, as long as we keep the gearing to a reasonable level. Some of those that didn't fell over very quickly when things went sour. It's typical of the general approach to smaller business from the powers that be: That despite all the spin and rhetoric, they really aren't that bothered in trying to make life easier or encourage us in our business and progressing them to employ more people. But it all feels like a load of ######. Link to comment Share on other sites More sharing options...
Brian Posted October 31, 2011 Share Posted October 31, 2011 It's typical of the general approach to smaller business from the powers that be: ...Part of the problem is that in Government speak SMEs (Small and Medium Enterprises) are businesses employing less than 250 people. Which in my book is quite a large company. Link to comment Share on other sites More sharing options...
dbuckley Posted October 31, 2011 Share Posted October 31, 2011 But is there a problem where debt is manageable? Having debts as opposed to being in debt? You're looking little picture, thinking about the situation you and you're company are in, where debt financing makes perfect sense, as it does for most assets that once purchased can earn their keep. The problem is UK PLC has too much debt in total, and therefore, something has to be done to persuade people and companies to use debt financing less. Link to comment Share on other sites More sharing options...
kerry davies Posted October 31, 2011 Share Posted October 31, 2011 Rant alert. UK PLC is supposedly broke and the coalition has to make cuts. These "cuts" have resulted in a superb saving in the last year of minus £5bn. We saved £15Bn and had to borrow an extra £21Bn to do so. Idiots! David, last year the treasury failed to lend (with interest!) Sheffield Forgemasters £80m to save our nuclear production industry, this year they are giving them a grant out of borrowed money. You figure it, I can't. Brian, the government has been quoted as saying that "SME's with a turnover of between £10m and £100m need banks support." SME's with £100m? Ye Gods they must think Chris and Pete are feral benefit scroungers. UK small business debt is the lowest in percentage terms it has been for decades (they can't get credit) and is manageable. Personal debt is fuelled by stagnant wages and poor reward for productivity whilst banking debt is fuelled by gambling addictions. You tell me which is the bad egg. If you want to know the problem and the solution try researching the wages/productivity gap that began with Thatcher/Reaganomics in '79. http://www.cepr.net/documents/publications/0702_productivity.pdf When the rich stop letting the cash flow around by grabbing it all it heralds disaster and is in fact anti-capitalist. I am a political animal but this is not a political rant, Blair was just as bad and it is the 32 year corruption of the system that threatens the system, and all our lives. Link to comment Share on other sites More sharing options...
dbuckley Posted November 1, 2011 Share Posted November 1, 2011 I agree this isn't politics, its economics. You're in the UK, and you are seeing all the detail. From the outside, all that is visible is a nation with excessive debt. Unless it's fixed, then eventually, you'll do a Greece. Only the USA can get away with infinite debt. The wages/productivity gap is one of my pet topics. That paper asks "Will Workers Ever Benefit from Higher Productivity?", and the answer to that is a definite "no". The reason is that productivity as measured at a country level has very little to do with how hard an employee works; country level productivity is about the types, quality, and value of bushiness a country has. The reported increase in productivity is almost all down to better quality and value businesses, so the productivity improvements are not a function of or due to the employees. You think the UK has it bad: Here in New Zealand we are slipping down the OECD ladder of productivity year on year, and our standard of living, which in 1950 was amongst the highest in the world has been steadily declining since. Our two biggest industries are dairy (we're the worlds largest processor of milk, and supply a lot of it too) and tourism. Both of these activities have productivity below the OECD average. So the better we get at dairy and tourism, and the worse we do, the lower our productivity gets... Frustration is... We have world class (and world-leading) companies, examples Tait Radio, and Serato, but our high-tech sector is small compared to the big two industries, and few seem to get that this is the sector we are good at and need to do more of. /rant. Link to comment Share on other sites More sharing options...
cfmonk Posted November 1, 2011 Share Posted November 1, 2011 Hi David, I'm afraid the economics of what you're saying also doesn't really stand up (and this is what I have a first class degree in). There is absolutely nothing wrong with borrowing to expand. That is what capitalism is about. Mr X has £100 to lend to somebody so he puts it in the bank and he allows that money to be lent to the people who will make more money with it (by buying a new tent, lighting desk, whatever) then both Mr X (the capitalist) and the person who borrows the money both get richer and everybody is happy. A full functioning credit market allows people to smooth their consumption (as households) and investment (as businesses). It makes a lot more sense for a household to pay for a house over 25 years than it does to save until your 60 and then buy one, it makes a lot more sense for my new shiny 20m tents to pay for themselves over the next three years whilst they are making money than it does for me to chuck all the cash at them up front. Similarly there is nothing wrong with governments borrowing money, in fact with inflation at 4.5% they can increase national debt by almost that amount each year without actually getting any worse off (it's why inflation is essentially another form of taxation). This only becomes a problem when it becomes expected that they will not be able to pay it back which is what we are worried about in the UK (and what is happening in parts of t'Eurozone). The "deficit crisis" in the UK was actually mostly caused not by overspending but by a fall in tax revenues from the banks which is similar to somebody suddenly losing their job and their mortgage lender getting worried about them meeting their repayments. I could go on and on about this but it really does suffice to say that affordable debt is good if used correctly, and that's at the national, firm and household level! Link to comment Share on other sites More sharing options...
dbuckley Posted November 1, 2011 Share Posted November 1, 2011 Rather than aruging, 'cos I agree with most everything you say, given the UK is in the position of debt level worry, why do you say earlier that "You really would think that given the current outlook the government would be trying to adopt fiscal policies which would encourage investment rather than saving" given that most investment involves more debt? Link to comment Share on other sites More sharing options...
kerry davies Posted November 1, 2011 Share Posted November 1, 2011 Hmmm, good points and valid but I believe based on a false premise, David. Business does depend on the quality of its' workforce to a massive extent, ask Chris about some of his "casuals" and what damage they can do to future earnings. Since the 1850's and the rise of industrial workforce influence the graph maintained the relationship; more productivity = more wages or strikes to get it. 1979 saw the start of de-regulation of markets and banking. Then union emasculation and wage stagnation was "bought" by allowing the "squeezed middle" to feel good about owning houses with ever inflating mythical "value". The lines diverged and only the top 1% had real term earnings rises causing the vast "fairness" gaps we now have which insulates those top people from the consequences of their actions. (Fred the Shred and his multi-million pension for failure.) Their gambling became ever more risky as the bigger the gamble the bigger the personal reward and this led to "bundling", toxic mortgages, CDS and all the other "vehicles" that even bankers do not fully understand. In turn we first had Barings, Lehman, Northern Rock and now Greece, Sub-Saharan Africa with the IMF/World Bank and the UK borrowing £1,000,000,000 to bail out banks. The solution, if the system is to survive, is growth and more equal sharing. What the coalition is doing is cutting off every green shoot as soon as it pops up. Borrowing a handful of seeds gets you a crop you can sell (and most importantly, more seed!) no seed = no crop. No crop = no seed for others to grow crops. One does not need a first class honours to understand the fundamental truth, if we don't invest for our future, we have no future. Link to comment Share on other sites More sharing options...
cfmonk Posted November 1, 2011 Share Posted November 1, 2011 Because the debt that we are worried about in the UK is the government debt, not serviceable debt taken on by firms who will use that debt to make money. The government seem to be getting themselves terribly confused. On the one hand you have them talking about how important it is to make the cuts so that interest rates remain low (because investors believe they will get their money back from government bonds) which would imply that they want firms to take advantage of the low interest rates to invest and expand and then on the other hand they remove the tax relief which one could get on that very investment and expansion. Joined up thinking is the only way eventually out of this mess and it seems to be what the government (and all governments) are failing to do. There needs to be a combination of keeping interest rates low, a fiscal system which encourages employment and investment for the future, a reduction in regulation for smaller businesses (controversial that one) and a freeing up of the credit system as well as some sort of stimulus to get household spending going again. Any of these on its own is likely to be costly and unsuccessful. It's only by putting them altogether that things might start improving! Chris Link to comment Share on other sites More sharing options...
kerry davies Posted November 1, 2011 Share Posted November 1, 2011 But when a government minister has just said on TV that they need to reduce regulation on small business thereby reducing employment rights and wages you wonder what planet they are on. Reduce wages to encourage people to spend? Take away employment protection to give employees confidence? Make cuts by increasing the numbers on benefits? Reduce the number of people who can afford to hire a tent to encourage the tent business? The lack of holistic awareness of these people is frightening, they are creating the conditions for revolutionary upheaval on a daily basis. As far as reducing regulation on business is concerned Chris, that began in '79 and is a major reason for our current unequal state causing lack of growth. Henry Ford was asked why he paid his workers so much more than his competitors. His answer?"So they can afford to buy my cars." Business appears to have forgotten that truism and the politicians definitely have. We have to share more equally or we are all doomed, Captain Mainwaring. Link to comment Share on other sites More sharing options...
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