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Capital Allowances

Industrial and Agricultural Buildings Allowances (IBAs and ABAs)

IBAs and ABAs are being phased out over three years from 6 April 2008 for unincorporated businesses and 1 April 2008 for companies as previously announced.

Plant and machinery

A new £50,000 Annual Investment Allowance (AIA) will be available to unincorporated businesses from 6 April 2008 and companies from 1 April 2008. Groups only get one AIA between them and there is legislation to restrict this to one £50,000 AIA across other connected businesses which have similar activities or share the same premises. There are transitional arrangements for accounting periods that straddle 6 April/1 April as appropriate.

The following changes also take place from 6 April 2008 for unincorporated businesses and 1 April 2008 for companies, some of which are as previously announced:

-    the rate of writing down allowances in the general pool reduces from 25% to 20%

-   a new classification of integral features is included in a new special rate pool with a 10% writing down allowance

-   thermal insulation and long life assets are also included in the new special 10% rate pool

-   100% first year allowances for cars with low carbon dioxide emissions are extended to 2013 although the threshold is tightened from 120g/km to 110g/km

-   100% first year allowances for expenditure incurred on natural gas and hydrogen refuelling equipment for vehicles has been extended five years to 2013

-   for accounting periods commencing after 1 April for companies or 6 April otherwise the general pool and / or the new special rate pool can be written off and a full balancing allowance claimed if it is £1,000 or less

There are various anti avoidance measures applicable from 12 March 2008 involving the sale and lease back of plant and machinery, lease premiums and companies claiming balancing allowances on plant and machinery in recently purchased companies which is sold along with the trade shortly after acquisition.