More on Annual Investment Allowance change

Tax Comments Off on More on Annual Investment Allowance change

In our July update we advised businesses to take care when timing their capital expenditure during 2012. You may remember that the Annual Investment Allowance is being reduced from £100,000 per annum to only £25,000 per annum. The effective date of the change is 6 April 2012 for unincorporated businesses and from 1 April 2012 for companies.

In order to avoid complications if your year end is different from the end of the tax year (31 March 2012 or 5 April 2012) you should make your investment during the trading year that ends in the fiscal year 2011-12. For example if your year end is December you should invest before 31 December 2011.

The types of assets that are covered by the AIA relief include:

  • Tools and equipment
  • Computers
  • Office equipment and furniture
  • Computerised machinery
  • Vans for business purposes
  • Capital expenditure on computer software

Integral features of a building, such as electrical systems

Items which do not qualify as plant and machinery for AIA include:

  • Cars
  • Walls, floors, doors, windows and stairs

If you would like any further advise or guidance please do give us a call.

Sue Stephens

Tax Manager