Introduction »

Allowances Alert!

The reductions in key capital allowances announced last year come into force from April 2012 - that is 1 April 2012 for companies and 6 April 2012 for the self-employed.

One of the key changes concerns the Annual Investment Allowance (AIA). This allowance provides 100% tax relief on most types of plant and machinery (not cars) for all forms of qualifying business.

Since April 2010 the maximum annual limit available has been £100,000 but this is to reduce to £25,000 annually for expenditure incurred from April 2012.

What this effectively means is that if a business delays the replacement of qualifying expenditure until April 2012 then it could significantly delay when it obtains the related tax relief.

At the same time the annual writing down allowances, otherwise available on unrelieved qualifying expenditure, reduce as follows:

• from 20% to 18% for the main qualifying pool
• from 10% to 8% for the special rate pool.

Now is the time to consider the potential impact these changes could have on your business and whether plans should be put into place to advance expenditure to secure tax relief earlier. Please contact us to review the impact of these changes on your business so that any opportunities to maximise allowances are not missed.

Introduction »