All change for tax relief on business assets
Businesses get tax relief on assets such as plant and equipment, office equipment, vans etc under a regime known as capital allowances. From April 2012 the rates at which tax relief is available will be reduced substantially.
Hardest hit is the relief on new asset purchases. 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. The maximum amount of the AIA will be reduced to £25,000 a year with effect from April 2012.
The Government has also announced that from April 2012 the rates of writing-down allowances (WDAs) for new and unrelieved expenditure on plant and machinery will be reduced from 20 per cent to 18 per cent per annum for expenditure in the main rate pool.
Kevin Winterburn commented "Although these changes are still a year away, businesses need to be planning now to ensure they get the maximum relief possible. Any business which is considering future capital purchases should have these changes to mind when considering the timing of those purchases".