‘Annual Investment Allowance’

Time running out for extra tax breaks on business assets

Tuesday, December 8th, 2015

Many businesses could soon miss out on the opportunity to claim early tax relief as they are not aware of major changes from next year.

The Annual Investment Allowance (AIA) is a form of enhanced tax relief, permitting a 100% write-off on the purchase of qualifying business assets (normally the tax relief against asset purchases is 18% or 8%, depending on the type of expenditure). In a bid to stimulate capital expenditure and boost suppliers’ and manufacturers’ order books, the Chancellor increased the maximum amount of expenditure to £500,000 but as announced in the Summer Budget this year, this will be capped at a permanent level of £200,000 from 1 January 2016.

Warns Julia Whelan, tax partner at Curo Chartered Accountants “Businesses affected by this reduction in relief will be those planning to spend in excess of £200,000 over the next few months on qualifying capital expenditure. I would urge these businesses to consider purchasing assets before 31 December in order to maximise their AIA”.

Qualifying capital expenditure covers most assets bought for use within the business and includes:

  • Computer hardware and qualifying software
  • Office furniture and equipment
  • Van, lorries and associated equipment
  • Machines used in the business, such as printers, tooling machines etc

Items not qualifying for the AIA include existing plant and machinery, land & buildings and cars. These lists are not all exhaustive and it is worth discussing planned expenditure with your accountant, to ensure the business’ entitlement to AIA is optimised.

For qualifying capital expenditure after 31 December 2015, 100% AIA relief is available on the first £200,000 bought in the year, with any excess attracting tax relief at the standard rates of 18% or 8%.

To find out how your business can maximise its entitlement to AIA, please contact Julia.whelan@curoca.co.uk or call 01527 558539..

AIA tax relief up to £250,000 – use it or lose it!

Wednesday, May 15th, 2013

Many businesses are still unaware that they could be claiming tax relief on up to £250,000 worth of asset expenditure and are missing out on an easy way of reducing their tax bills, warns Julia Whelan, tax partner at Curo Chartered Accountants.

The Annual Investment Allowance (AIA) was increased to £250,000 with effect from 1 January 2013 and will reduce back down to £25,000 from 1 January 2015. Most assets qualify for AIA which typically includes plant and machinery purchased for use in the business.

Says Julia, “It is important that businesses are reminded of the relatively generous levels of tax relief available under the AIA and take advantage of it wherever possible; we are urging clients to consider the timing of their asset expenditure and bring it forward where possible to qualify for the higher tax relief before it reduces tenfold.”

The AIA relief is restricted if the business’ year end straddles either of the start or end dates of the enhanced relief.

Julia concludes: “The message is simple; this higher tax relief is not here to stay, so use it or lose it!”.

Fancy tax relief of up to £250k on your assets?

Monday, January 21st, 2013

From 1 January 2013, the Annual Investment Allowance (AIA) increases to a maximum entitlement of £250,000 meaning businesses can claim up to this amount on the purchase of new assets.

This higher rate will be available until 1 Jan 2015 when it reverts to £25k and has been introduced to encourage investment in plant and machinery in a bid to aid the economic recovery. The AIA covers most asset purchases with the few exeptions including cars.

Care needs to be taken around when the assets are purchased and some businesses with a year end straddling the dates of increase and decrease (1 Jan 2013 and 1 Jan 2015) will need to pro-rate the maximum entitlement.

Essentially though this is good news for businesses who are looking to buy assets. Perhaps it is a good time to bring forward investment from 2015 and beyond to take advantage of this higher rate and reduce the tax bill.

Curo

Jan 2013

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AIA – spending sprees in the new year?

Monday, December 10th, 2012

The Chancellor announced last week that the Annual Investment Allowance (AIA) would be increased from 1 Jan 2013 to £250k par annum for two years.

Given the current AIA is currently only £25k, this was somewhat of a nice surprise amid an otherwise rather gloomy Autumn Statement.

So, depending on the year end, from 1 Jan 2013, businesses can claim a 100% tax deduction when purchasing capital assets up to the value of £250k. Cash-flow and business need permitting, it may therefore be worth delaying expenditure for another month at least in order to take advantage of this generous relief.

Check the numbers first and be aware of what element of the £250k the business is entitled to. For example, a business with a year end of 31 March 2013 will only be entitled to 3/12 of the full amount by the year end. Timing of purchase is essential in order to claim the maximum tax relief.

The relief covers most assets and is intended to encourage businesses to invest, whilst giving a boost to the still delicate retail sector.

Curo

Dec 2012.