£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
Loading Twitter Feed. Please wait a moment ..