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Tax Chat - Are you considering purchasing assets for your business?
Jan 16, 2012
Annual Investment Allowance (AIA) has been a great tax saver for our clients and we are currently processing AIA claims in our computations on a daily basis. Therefore we believe the substantial reduction down to £25,000 may take many companies by surprise.
The 100% AIA was initially introduced with a £50,000 limit in respect of expenditure from April 2008. It was then increased to £100,000 from April 2010 and will now decrease to £25,000 from April 2012.
It will be particularly frustrating for anyone who has made a significant investment to find out that, had they just accelerated it, they would have received additional relief. Furthermore, the normal capital allowances rate will also reduce from 20% to 18% in April 2012. Although a small reduction, this will slow down the rate at which companies receive relief against capital expenditure and creates a further reason to maximise AIA claims now.
The best way to maximise AIA is to ensure that qualifying expenditure is incurred before 1 April 2012. However, please be careful and ensure that any accelerated expenditure you do make would qualify for AIA in the first instance. We do not want companies investing in assets earlier than required with the intention of securing a tax advantage only to discover that it was not available in the first place.
To briefly summarise, assets which do NOT qualify for AIA include cars, land, buildings and property alterations but DO include moveable plant and machinery, equipment, fixtures and fittings, tools and office equipment (including computers). This list is not exhaustive and there can be detailed rules on what does and does not, for example qualify as plant and machinery. Therefore please check with us before making a purchase so we can confirm whether AIA will be available or not against that purchase.
For further information or to discuss, please contact Lesley Sutton on 01484 550037 or taxchat@revellward.co.uk
The 100% AIA was initially introduced with a £50,000 limit in respect of expenditure from April 2008. It was then increased to £100,000 from April 2010 and will now decrease to £25,000 from April 2012.
It will be particularly frustrating for anyone who has made a significant investment to find out that, had they just accelerated it, they would have received additional relief. Furthermore, the normal capital allowances rate will also reduce from 20% to 18% in April 2012. Although a small reduction, this will slow down the rate at which companies receive relief against capital expenditure and creates a further reason to maximise AIA claims now.
The best way to maximise AIA is to ensure that qualifying expenditure is incurred before 1 April 2012. However, please be careful and ensure that any accelerated expenditure you do make would qualify for AIA in the first instance. We do not want companies investing in assets earlier than required with the intention of securing a tax advantage only to discover that it was not available in the first place.
To briefly summarise, assets which do NOT qualify for AIA include cars, land, buildings and property alterations but DO include moveable plant and machinery, equipment, fixtures and fittings, tools and office equipment (including computers). This list is not exhaustive and there can be detailed rules on what does and does not, for example qualify as plant and machinery. Therefore please check with us before making a purchase so we can confirm whether AIA will be available or not against that purchase.
For further information or to discuss, please contact Lesley Sutton on 01484 550037 or taxchat@revellward.co.uk
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