Our opinion on the legal world, and how it could affect you

Claim Annual Investment Allowances before they are cut!

10th Oct 2015

Upgrading servers or refreshing desktops before the end of the year could make sense for businesses - why? To maximise entitlement to the Annual Investment Allowance.

Big Cut in Allowances in December 2015

Businesses have until December 2015 to make the most of the tax relief given for major investments.The Annual Investment Allowance (AIA) is set to be cut from £500,000 to £200,000 from the end the year.

Businesses claimed £79.7bn in capital allowances for machinery and IT equipment in 2013/14 – the highest total since the 2008 recession and up by 19% on the £66.9bn of capital allowances claimed the previous year.

However, it is likely that the rate of investment in new equipment and machinery could start to slow as a key capital allowance is cut back from the end of 2015.

While tax relief is available on capital investment over the AIA limit, the relief is spread across the whole life of the asset rather than being available immediately, making it less valuable to businesses seeking to reduce their short-term tax liability.

Businesses can potentially make big savings in terms of tax relief by purchasing PCs and servers before the year is out.

Frank Rogers comments

"The availability & importance of capital allowances is something Accountants should advise business owners about but too often they fail to do so because they find the whole regime surrounding these Allowances too complex. As a result more and more professional negligence claims are being brought against Accountants.

For a more detailed explanation of capital allowances and professional negligence claims arising from them click this link."