The Budget – Capital Allowances Deadline – 2012

Annual Investment Allowance (AIA)

The annual Investment Allowance (AIA) allows most businesses, regardless of size, to reduce their taxable profits by the full amount of their annual capital expenditure on most plant or machinery (apart from cars) up to a maximum amount, which is currently £100,000 a year.

All businesses currently benefit from immediate tax relief on the first £100,000 a year that is spent. However from 1st April 2012, this allowance is being reduced to allow tax relief only on the first £25,000 spent.
Now is therefore the time for businesses to look at their capital spend plans to make sure costs are incurred in the period in which most relief will be generated.

Plant and Machinery Rate Reduction

• From 20 per cent to 18 per cent per annum for expenditure in the main rate pool; and
• From 10 per cent to 8 per cent per annum for expenditure in the special rate pool.
Expenditure on long life assets, thermal insulation, integral features and cars with emissions of 160g/km or more (in the case of cars purchased on or after April 2009) is allocated to the special rate pool.
These rate changes will take effect from 1 April 2012 (for corporation tax) or 6 April 2012 (for income tax).

Fixtures Mandatory Pooling

The Government are considering introducing a requirement that businesses pool their expenditure on fixtures within a short time after acquisition. The consultation on ‘Fixtures Mandatory Pooling’ is scheduled for May 2011, the extent of these changes will be clarified then.

It is important to be aware of this potential measure, and plan for claiming latent Allowances sooner rather than later to ensure no tax relief is lost.

Other Capital Allowances News

100% Enhanced Capital Allowances Regime will expand to include new technologies;
Business Premises Renovation Allowance to continue for 5 years;
Capital Allowances for Flat Conversions to be abolished;
Land Remediation Relief to be abolished.

The Future for Property Tax Relief…

From April 2012, many Capital Allowance Property Tax Reliefs will be reduced.

It is important to have your entitlement professionally reviewed in order to ensure you derive maximium benefit from Capital Allowances.

The time to maximise the opportunity is now!!

This entry was posted on Thursday, March 31st, 2011 at 12:06 pm and is filed under Budget News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.