Using your Balance Sheet before making a major purchase
Three things to check before making a significant purchase
Before committing to a significant purchase, check three things on your Balance Sheet.
Cash position
A large outflow will immediately reduce your bank balance. Check that sufficient cash remains for upcoming commitments: next month's payroll, the upcoming VAT payment, and any Corporation Tax due date.
Current liabilities
If you have significant short-term debts (supplier bills overdue, tax payments imminent), a large cash outflow may create a cash flow problem even if you are profitable.
Timing relative to your year-end
Purchasing a qualifying asset before year-end means a capital allowance deduction in the current year, which reduces this year's Corporation Tax. Purchasing after year-end defers the deduction by 12 months. Contact us before any significant purchase, so that we can advise on the tax treatment and whether timing matters.
💡 Good to know: A quick call or message to us before any significant purchase takes less than five minutes and can save you from a poor timing decision. We can confirm the tax treatment and whether there are any other considerations before you commit.
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