insideKENT Magazine Issue 38 - May 2015 | Page 151
BUSINESS
ENHANCED
ANNUAL
INVESTMENT
ALLOWANCE –
THE CLOCK IS
TICKING
Rick Schofield
THE ENHANCED ALLOWANCE OF £500,000 IS ONLY WITH
US FOR THIS YEAR, SO THE TIME HAS COME TO EITHER
USE IT, OR LOSE IT.
The Annual Investment Allowance (AIA) is a 100%
deduction against taxable profits based on total
expenditure incurred on qualifying plant and
machinery in an accounting period, and is
designed to stimulate business investment in
plant or machinery. You can claim capital
allowances on items that you keep to use in your
business. These are known as ‘plant and
machinery’. Higher value company purchases
are held as assets on the company’s balance
sheet and their value is depreciated over time.
Company assets are not tax-deductible, and the
depreciation charge is not allowed for tax
purposes. Instead a system of capital allowances
exists that enables companies to obtain tax relief
on the value of purchases, subject to various
limits and conditions.
Allowance increased to £500,000 for
this year only
The amount was temporarily increased from
£25,000 to £250,000 for 12 months to 31st
December 2014, and has now been extended
to 31st December 2015 with the increase to
£500,000. In total, the AIA has changed four
times since 2008.
medium-sized businesses will take advantage of
the current enhanced allowance to increase, or
bring forward their capital expenditure plans. So
there is no time like the present in making strategic
investment in your business for maximum tax
advantage. If you do not have a yearend of 31st
December, careful planning is needed to ensure
that when you incur the expenditure, it falls into
the correct qualifying period.
What counts?
Items that count as ‘plant and machinery’ can
be more than just equipment. Plant and machinery
that you would readily recognise as qualifying
includes the following:
• Integral features of a building (for example lifts,
escalators, moving walkways, space and water
heating systems, air-conditioning and air cooling
systems, hot and cold water systems, electrical
systems, lighting systems, external solar
shading)
• Some fixtures (for example fitted kitchens,
bathroom suites, fire alarms and CCTV systems)
• Alterations to a building to install other plant
and machinery (but excluding repairs)
What does not count?
But the most important news is that it is due to
change again, to £25,000, on 1st January 2016.
This is, of course, subject to any change in the
Government following the election on 7th May.
The Government is hoping that small- and
Items that don't count as ‘plant and machinery’
are:
• Buildings, including doors, gates, shutters,
mains water and gas systems
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• Land and structures, such as bridges, roads
and docks
• Items used only for business entertainment
such as a yacht
• Items you lease, rather than own
How Wilkins Kennedy can help
Our team has been helping many businesses
across the South East take advantage of this
unique opportunity. If you would like to know
more and would like advice about your plans,
contact us today for a no obligation discussion.
01233 629255 (Ashford)
01689 827505 (Orpington)
[email protected]
www.wilkinskennedy.com