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Capital allowances after the emergency Budget

There have been a lot of tax changes this year with two Governments, two Budgets, and eventually three Finance Acts. Some of the changes are relatively insignificant but some are important. One area that will have a major effect on businesses is Capital allowances. There are major changes due from April 2012. The Annual Investment Allowance provides 100% relief on currently £100,000 of expenditure eon plant, fixtures, etc. This is reducing to £25,000. The annual writing down allowances given on other expenditure are also reducing by 2% to 18% and 8% respectively.

This means that in planning terms there are a few areas to consider:

  • It would be sensible to maximise available allowances over the next 18 months
  • The 100% allowances on R&D plant and a certain “green” plant (www.eca.gov.uk) are still available - identification is very important
  • Short life asset claims for plant, etc with an expected life of 4 years or less can bring forward allowances.

Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Cathy you can call her on 01908 605552.

 

 

Date: 29th July, 2010
Author: Cathy Corns

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