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For many, the run up to Christmas involves planning for parties, work do’s and the Christmas Lunch. For our tax department, planning of another kind could be on the menu!
As many business owners will be aware, it has been possible to obtain 100% tax relief on certain capital costs for some time, using the Annual Investment Allowance (AIA). The limits for obtaining this relief have fluctuated over its lifetime, and it was announced, that, from April 2014 until December 2015, the level of AIA is to be increased temporarily to £500,000, before dropping to just £25,000 from January 2016.
While this is a welcome relief for many businesses, care will be required when considering large capital purchases, to ensure that the costs will qualify for the AIA, and that the expenditure is incurred at the right time. Failing to consider these issues could mean that the availability of AIA is substantially restricted during this period of temporarily increased allowances.
The increased level of AIA will begin to reduce, on a sliding scale, for those with accounting periods ending between January 2016 and December 2016. As a result, identifying planned qualifying expenditure ahead of 31 December 2015 may be particularly important.
If you’re planning any capital expenditure between now and December 2016, and wish to make use of the associated increased AIA, it’s important that advice is taken as soon as possible, to ensure that you take advantage of the temporary relief in the most economical way possible.
Let us offer some food for thought as we help guide you through the AIA rules, and plan how best to utilise the reliefs available. If you’d like to see what tax savings we can bring to the table, please get in touch with your usual Springfords contact or alternatively, you can ring us on 0131 440 5000 or email us at firstname.lastname@example.org.
This is a general guide which is intended to give background information and is not a substitute for taking specific advice based on your particular circumstances.