Capital Allowances - maximising the reliefs

Under the capital allowances scheme, your business can obtain tax deductions for depreciation and losses on the disposal of assets used in the business. This may include cars, plant, machinery and equipment.

The rate of the allowances will depend on the nature of the asset, and the size of your business. The timing of the relief will also depend on the date the expenditure is incurred.

If you make a purchase just before the end of the current accounting year, the allowances will usually be available a year earlier than if the purchase is made just after the year end. In the same way, the disposal of an asset may trigger an earlier claim for relief or even an additional charge to tax.

Your decision may well be affected by forthcoming reforms to the capital allowances regime. 6 April 2008 will see the introduction of a new annual investment allowance for the first £50,000 of expenditure on plant and machinery.

We can advise you on choosing the best time to incur expenditure, so that you can maximise the allowances available to you.