Businesses planning to invest in plant or machinery are being urged by DSH Chartered Accountants & Business Advisors to act swiftly to take advantage of a substantial tax break available until the end of the year.
The Annual Investment Allowance (AIA) is a 100 per cent allowance for plant and machinery that is capped at an annual amount. This means all qualifying expenditure up to the capped level can be written off against taxable profits for the same period.
Until December 31, the AIA is set at £500,000. From January 1, 2016, it will return to its previous level of £25,000.
“AIA applies to most assets bought by businesses, including vans, lorries, diggers, machines and tools, office equipment and computers – but not cars,” said Stephen Metcalf of DSH’s Maidstone office.
“The current limit should cover the annual asset spend of most SMEs, but businesses of all sizes with capital expenditure plans may want to ensure they are completed before the AIA cap reverts to its previous level,” added Stephen.
The allowance can be claimed by individuals, partnerships or companies carrying on a trade, profession or vocation or a UK non-residential property business or a furnished holiday let.
“This is an extremely attractive benefit for businesses of all sizes,” said Stephen. “However, the timing of capital expenditure can significantly impact on tax liabilities so, before rushing to take advantage, we would strongly advise company owners to take professional advice in relation to when purchases are made to ensure maximum availability of the relief.”
To find out more about AIA and how your company could benefit, contact Stephen Metcalf on 01622 690666 or visit www.dsh.co.uk.