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Tax Tip

New Capital Allowance Regime

The Annual Investment Allowance for plant and machinery is to be reduced from £100,000 to £25,000 for expenditure incurred on or after

•    1 April 2012 for companies
•    6 April for sole trader, partnerships & LLPs.

The opportunity may arise to bring forward expenditure to use the allowance before it is reduced.

De-pooling Short Life Assets

An election may be made to place an asset in a separate pool (not cars).
This allows a balancing allowance to be made on disposal if the proceeds are less than the tax written down value brought forward. Hence, the election is unadvisable if the asset appreciates in value.

Currently a pool lasts for 4 years but the pool will be extended to 8 years for expenditure incurred after 31 March 2011.

Suitable items are computers.

Business Premises Renovation Allowance.

Such 100% up-front tax relief for the costs of renovating or converting unused business property in any of the 2,000 or so areas of the UK that are designated as disadvantaged has been extended to 2017.

Land remediation relief (cleaning up contaminated/derelict land) and flat conversion allowances (property above shops) will be scrapped from 2012.

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