Businesses planning to invest in new equipment or machinery should be aware of the changes to the capital allowances rates that will apply from April 2012. Currently businesses can claim a 100% deduction for the first £100,000 of expenditure in any annual accounting period on plant, machinery, utilities works and commercial vehicles (Annual Investment Allowance). Expenditure above this limit qualifies for an annual deduction of 20% of the cost of most items of plant and machinery or 10% for certain cars and plumbing and electrical costs on a reducing balance basis (Writing Down Allowances).
From April 2012 the expenditure limit for Annual Investment Allowance reduces to only £25,000 and Writing Down Allowances reduce to 18% and 8%.
Businesses planning to buy new equipment, tools, vans or other qualifying assets over the next few months may wish to plan their expenditure to take advantage of the higher limits while they remain. The corporate tax team at Ritson Smith can advise.
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