A quick reminder to look at the realistic life on new fixed assets
Following the changes in capital allowances earlier this year, if your capital spend exceeds the annual investment allowance (£50,000) it could take over ten years for a business to get tax relief for most of the costs of equipment used in its business.
However, if you buy assets that you expect to be used for less than four years from the end of the current accounting period, you can make an election and keep the asset separate. Tax relief will be given at the usual 20% rate but when the asset is sold or scrapped relief for all the remaining value will be allowed in that year.
This is definitely worth looking at, particularly for unincorporated businesses, bearing in mind the new 50% tax rate.
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 blog with Cathy you can call her on 01908 605552.
Date: 23rd October, 2009
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