Take advantage of your current Annual Investment Allowance

We are advising business clients to take advantage of the current Annual Investment Allowance. Next year it's reducing from £100,000 to £25,000. Timing, apparently, is everything.

David Robinson, Tax Consultant at Armstrong Watson, says:

"At present businesses that invest in the purchase of plant and other qualifying equipment can write off the total cost against their taxable profits as long as the claim does not exceed £100,000. For self-employed business owners this allowance is worth up to £50,000 in lower tax payments, depending on your higher rate tax position.

“The £100,000 limit is reducing from April 2012 to just £25,000 and there are complications if your accounting year end is not the end of the tax year. If you are contemplating any capital expenditure in the near future you may be able to recoup a significant part of your outlay in reduced tax payments. Timing is absolutely critical. To minimise any possible loss of relief take professional advice now.

“Expenditure that should qualify for the relief includes: tools and equipment, computers, office equipment and furniture, computerised machinery, vans for business purposes, capital expenditure on computer software and integral features of a building, such as electrical systems. Cars do not qualify.

“Also changing from April 2012 are the rules on claiming capital allowances on fixtures in second hand buildings. Businesses that have acquired a second hand building recently should seek a professional review before the rules change. We have considerable experience in this area.”

Armstrong Watson is happy to talk to any business owners or taxpayers who think they may be affected.

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