Hundreds of small businesses across the South East could miss out on thousands of pounds worth of savings because they are unaware of a new year-long Government incentive which begins on April 1st.
Our London office is warning businesses in the region to take advantage of an increased rate of first-year capital allowances for spending on most plant and machinery.
This will increase from 40% to 50% and will apply to purchases made between 1st April 2004 and 31st March 2005.
It will mean that smaller firms can offset 50% of the cost of buying the goods, within the first year of purchase, against their tax bill for that year.
The aim of the incentive is to enable small businesses to improve their cash flow efficiency, while making significant savings on valuable investments.
The 50% first-year capital allowances rule will apply to the purchase of plant and machinery, but will exclude cars, assets which are leased out and some ‘long-life’ assets – those which are expected to be used for more than 25 years.
Businesses can make further savings on designated energy-saving plant and machinery investments, including cars with low carbon dioxide emissions (ie a CO2 rating of up to 120g/km), which carry a 100% first year allowance.
Roy Maugham, tax partner in London, said: “Investment in plant and machinery is a huge cost for small businesses. This new incentive will mean savings of thousands of pounds for some businesses.”
“Businesses planning to make this type of investment must do so before 31st March 2005 in order to benefit from the increased tax saving.”
For more information on our Taxation Services visit our Services area.