Buying second hand machinery

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whats the best way to pay when buying second hand machinery. The day of hire is gone out the window for certain machinery. Just wondering rather than paying one big lump out. How do farmers/ contractors buy these machines.Do they take out a loan or what? :rolleyes:

anthony500_1

Sorry to re bump this thread but didn't want to start another seeing as this one was there already. And couldn't find an answer with a quick search on here

OK I'm not vat registered
I do file tax returns but only pay a small amount of tax circa 500/1000/yearly on farm as work as PAYE and farm is a hobby and is getting up and running so reinvesting money is priority
So my question is, what is the most economical way to buy a second hand tractor say for 20,000 including vat if appicable.

Option 1 save up the "cash" and buy outright,
Option 2 get a loan over say 5 years and pay say 6% interest on loan

So my question is, which is the best option, I know there is a tax deduction for machinery over I think 7 years but is it a case that the loan would outweigh the tax paid on money sitting in the account

And before ye ask I have a 2wd tractor already that does everything just about safely, but looking for changing up to 4wd with front loader, as bales are an effort for the nose of the mf265 to keep on the ground on the hilly ground I have

Thanks in advance for any advice

lakill Farm

Capital allowance is currently over 8 years (12.5%)

Best way to pay for it is what best suits both your tax planning and cash flow and where ever is available. A lot depends on year of tractor but more than likely leasing or HP wount be available on older tractors.

Really your down to a personal bank loan then.

Will the tax benefits cancel out the repayment per annum.

No one can answer that but highly probable no

anthony500_1 wrote: »

Sorry to re bump this thread but didn't want to start another seeing as this one was there already. And couldn't find an answer with a quick search on here

OK I'm not vat registered
I do file tax returns but only pay a small amount of tax circa 500/1000/yearly on farm as work as PAYE and farm is a hobby and is getting up and running so reinvesting money is priority
So my question is, what is the most economical way to buy a second hand tractor say for 20,000 including vat if appicable.

Option 1 save up the "cash" and buy outright,
Option 2 get a loan over say 5 years and pay say 6% interest on loan

So my question is, which is the best option, I know there is a tax deduction for machinery over I think 7 years but is it a case that the loan would outweigh the tax paid on money sitting in the account

And before ye ask I have a 2wd tractor already that does everything just about safely, but looking for changing up to 4wd with front loader, as bales are an effort for the nose of the mf265 to keep on the ground on the hilly ground I have

Thanks in advance for any advice