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.