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Capital allowances

Changes to the Rate of Capital Allowances

In recent years companies, partnerships and individuals in business have been able to claim 100% tax relief on the first £100,000 of expenditure incurred on plant and machinery. Any expenditure above this level has attracted tax relief at 20% in the year of purchase. This is however soon to change as the maximum investment allowance of £100,000 is to be reduced to £25,000 with effect from 1 April 2012 for companies and 6 April 2012 for partnerships and individuals. Expenditure above this limit will be eligible for relief at 18%.

The amount of relief that is available is determined by the date that the relevant asset is purchased. There are complex transitional rules and it is essential that the timing of significant purchases is considered carefully to maximise the tax relief that is available.

If you are intending to purchase plant and machinery this year please give me a call to discuss the timing of this as it may be tax efficient for you to make the purchases before the end of March.