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Autumn Statement should feature economy boosting tax breaks

Will the new Chancellor continue the Government’s commitment to promoting economic growth via capital investment incentives such as the Annual Investment Allowance in Wednesday 23rd November’s Autumn Statement? Stuart Rivers of capital allowance specialists Stuart Rivers Associates really hopes so. In fact he would encourage Mr Hammond to take the opportunity to increase this particular tax saving allowance to the more generous £500,000 maximum it was up to December 2015.

There have been many changes to this first year allowance which is currently set at £200,000 per annum for all qualifying plant and machinery purchased from 1 January 2016 and this is supposed to be for the life of the Parliament but Brexit may have changed that. Eligible expenditure includes most assets purchased for use by a business for example office furniture and equipment, building fixtures such as shop fittings, heating and lifts.

The application of this particular allowance is currently rather complicated due to transitional rules introduced at the last Budget. For example a business with a 31st March 2016 year-end is able to claim a maximum of £425,000 for the period but no more than £50,000 of the business’s actual expenditure would be covered by its transitional AIA element for the part period 1st January 2016 to 31st March 2016 i.e. the AIA available on 31st December 2015 is £425,000 but on 1st January 2016 it’s only £50,000!

This means businesses need to very carefully account for qualifying expenditure and would be advised to seek advice about when is best to make future investments in plant and machinery or fixtures and fittings.