If you are planning to purchase plant and machinery, you should consider when you will purchase it and how much you will spend and ideally contact us before the purchase. Delaying or advancing expenditure may assist in up front tax relief being maximised.
100% tax relief can be obtained on relevant capital expenditure on plant and machinery up to certain levels in any accounting period. Relief is given via the annual investment allowance (AIA) which can be claimed by individuals, partnerships and companies.
Over the last year, due to changes in the maximum amount of AIA that can be claimed, businesses should get advice on the available AIA as, depending on the accounting date of the business, the calculations can be complex, particularly in the 2012/13 and 2013/14 tax years.
AIA rates per annum are as follows.
- Up to 1 April 2012 (or 6 April for unincorporated businesses) £100,000.
- From 1 April 2012 (or 6 April) to 31 December 2012 £25,000.
- From 1 January 2013 to 31 March 2015 (or 5 April 2015) £250,000.
Apportionment of the above amounts will be required to work out the available AIA in any accounting period.
Generally one AIA is available per business but if businesses are controlled by the same person or the company is part of a group or under common control then only one AIA is available to split between the related entities.
AIA is not available for partnerships where not all the partners are individuals, for example where one or more of the partners is a trust or a company. However, if the plant and machinery is purchased by the company it will be able to claim AIA in its own right, so the availability of the £250,000 allowance could be maximised.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
