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 151 • 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