| New Capital Allowances Regime |
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| Written by Daniel Gricks | |
| Thursday, 01 April 2010 | |
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When you buy an asset for your business you cannot charge the cost of this against your profits in one year. You must write them down over a number of years. For tax purposes these write downs are called: Capital Allowances April 2008 saw the start of a new regime for capital allowances. First Year Allowance (FYA) for small and medium sized businesses have been abolished.
The rate of relief given on the general pool of expenditure on plant and machinery has been reduced from 25% to 20% and to counteract this, an Annual Investment Allowance (AIA) has been introduced.
It is important to identify the costs correctly to enable the correct relief to be claimed. A reduced rate of writing down allowance, 10%, is now given to a specific list of items that are integral to a building.
· AIA providing 100% relief on the first £50,000 of expenditure in a year, excluding cars
· Expenditure over £50,000 is allocated to an appropriate pool
· If AIA is not utilised, tax relief is lost
· Short life asset elections are likely to be scrapped in the next three to four years
· 100% FYA are allowable on energy saving or environmentally beneficial items listed on www.ECA.gov.uk
· 100% initial allowance available on business premises renovation if you are in a “disadvantaged area”
If you are thinking of buying or renovating any sort of asset, please call us first – we can help ensure you maximise the reliefs available |
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| Last Updated ( Wednesday, 09 June 2010 ) |
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