£250k Extension to the Annual Investment Allowance now in force

£250k Extension to the Annual Investment Allowance now in force

The doubling of the Annual Investment Allowance from £250k to £500k was one measure in Budget 2014 which was widely welcomed.

The increased allowance means that businesses can spend up to £500,000 on qualifying capital expenditure and receive a 100% tax deduction against their profits.  The Chancellor also went a step further and extended this increased allowance to 31 December 2015.

Originally it was intended that that the allowance would reduce from £250,000 to £25,000 on 1 January 2015.  Instead the new increased allowance will apply until 1 January 2016 before dropping back to £25,000.  This gives businesses an extra 12 months to invest in capital expenditure up to £500,000 and receive the maximum tax relief possible.Maximum tax relief on qualifying expenditure of £500,000 and receive the maximum tax relief possible.

Maximum tax relief on qualifying expenditure of £500,000

 

Up to and including 31 December 2015

From 1 January 2016

Company paying corporation tax at 20%

Sole Trader/Partnership paying income tax at 40%

Company paying corporation tax at 20%

Sole Trader/Partnership paying income tax at 40%

 

£100,000 immediately.

 

£200,000 immediately.

 

£22,100 and writing down allowance of 18% per year thereafter.

 

£44,200 and writing down allowance of 18% per year thereafter.


The new higher allowance took effect from 1 April 2014 for companies or 6 April 2014 for sole traders/partnerships.

For more information on how to maximise the benefit of your capital allowances claims please contact our Tax Partner, Chris Barrington on the details below:

Chris Barrington
email: chris.barrington@jsllp.co.uk
telephone: 01942 292505

 

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