Depreciation and tax
Depending on your business, you may be able to claim a tax deduction for depreciation. Talk to us about how this applies to your business assets.
Most assets lose value over time as they get older. This is known as depreciation. Businesses can claim depreciation loss as a deductible expense each tax year.
You can claim a deduction for depreciation loss on capital assets. You can do this for those you own, lease (under certain types of leases), or buy under a hire purchase agreement and use, or intend to use, in your business. Assets are depreciated at different rates. Inland Revenue set depreciation rates based on the cost and useful life of assets.
If you rent out short-stay accommodation, you can claim deductions for depreciation on chattels being used to earn income. But you can only claim the proportion relating to when the chattels were used to earn income.
The rules on depreciation have changed several times in the last decade. Special rules were made for farming businesses. And the Government introduced further changes with the COVID-19 tax relief measures. Talk to us about how the tax implications of depreciation affect your business.