Should I buy equipment before my year end to reduce tax?
Buying qualifying equipment before year end may bring tax relief into that period. However, contract terms and payment timing matter. The purchase should also make business sense and fit your cash flow.
These answers provide general information, not advice tailored to your circumstances. Rules can change and exceptions may apply — speak to the CASS team before making a tax, accounting or financial decision.
Check timing before committing
A qualifying purchase may reduce taxable profits in the current accounting period if the expenditure falls within that period. AIA must be claimed for the period in which the expenditure is incurred. HMRC's timing rules look at the contract and when payment becomes due, so an invoice date alone does not decide the answer. Hire purchase has specific rules linked to starting to use the equipment. Check the terms before relying on a year-end deduction. Also consider whether you need the asset, what it will help you achieve and how you will fund it. A tax saving does not make an unnecessary purchase affordable.
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