30 October 2018
Budget Capital Allowance Announcement
During his Budget speech on 29 October 2018 the Chancellor Philip Hammond announced a 2 year increase in the Annual Investment Allowance (AIA) from the current £200,000 level to £1m. The AIA is a form of capital allowance which effectively gives first year tax relief for capital expenditure on qualifying plant and machinery used in a trade or other qualifying activity. Welcome news for any business investing heavily in machinery, infrastructure and even premises re-fits.
The two year period runs from 1 January 2019 to 31 December 2020 and for any business whose accounting date straddles the start or end of that period there will be transitional rules determining both the maximum claim for the whole period and also when in that period the expenditure can be incurred.
To illustrate how your business might be affected by the change we’ve put together a ready reckoner. Simply put your year start date in the yellow box to see how the allowances work.
The ready reckoner deals with straightforward situations and should be seen as an illustration of the rules and cannot be a substitute for seeking professional advice on your particular circumstances.
Disclaimer: This ready reckoner has been produced prior to publication or finalisation of the legislation which will give effect to the changes and so is modelled on the illustrative transitional rules published 29 Oct 2018 by HM Govt. It reflects the simple situation of a singleton UK based company with a 12 month chargeable period of account and is intended only to give an illustration of the effect of the changes. It does not accommodate long or short periods of account or groups of or connected businesses. UHY Hacker Young accept no duty of care or liability of any kind to users of this ready reckoner and users must seek appropriate professional advice on their own circumstances before committing to or refraining from a particular course of action. Copyright UHY WKH Ltd trading as UHY Hacker Young
If you think any of the above may be applicable to you, please do not hesitate to contact me or your local UHY specialist to discuss your options.
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