Planning to expand your business through investments or purchases of equipment could be more cost effective than you think.
Did you know?
Businesses are entitled to claim Capital allowances, on particular purchases or investments. In reality this means you can save money. A proportion of these costs can be deducted from your taxable profits and thereby reducing your tax bill.
Capital allowances can be claimed on plant and machinery, buildings – including converting space above commercial premises to flats for renting – or research and development.
The amounts that can be claimed are variable and dependant on what you are claiming for. In some cases, the rates are different in the year you make the purchase from those in subsequent years.
The major new system is the annual investment allowance scheme whereby you can claim 100% of the first £50,000 of additions to plant and machinery. This includes vans, tools, computer equipment, fixtures and fittings etc. But not motor cars.
A capital allowance claim can be made any time up to the normal time limit for making or amending your tax return (income tax) or 12 months after the filing date for your Company Tax Return. In the event of there being an enquiry into the return this period will be extended.
Varying amounts of the allowance can be claimed. For example if you claim 10 per cent instead of the 25 per cent you are entitled to, the balance can be pooled and carried forward will be higher so claims for later years will be higher. If your business is a partnership, you need to claim your capital allowances collectively, not as individual partners.
If you wanted any assistance in this please contact us.