Capital Allowance Changes
| Published: 8th May 2008 22:10 |
Capital Allowance Changes
In his 2007 Budget Speech, Gordon Brown outlined a reform of corporation tax, combining changes in tax rates with changes to capital allowances.
That was all a long time ago, and we still await the legislation. HM Revenue & Customs have, however, issued various consultation documents and some draft legislation. From this, we can be reasonably certain that there will be :
WINNERS
• the main rate of corporation tax will reduce from 30% to 28%
• Businesses can claim a new Annual Investment Allowance ("AIA") of up to £50,000;
• Some expenditure on, for example, hot and cold water systems that have not previously attracted capital allowances may be treated as "integral features" with 10% allowances
• The rate of allowance on long life assets will increase from 6% to 10%
LOSERS
• the small companies' rate of corporation tax is going up to 21%.
• the reduction in the rate of writing down allowances will broadly make those spending more than £150,000 on plant and machinery worse off
• companies investing in property will be hit by the new "integral fixtures" classification;
• Companies with Industrial Building Allowances will lose relief.
So what does this mean? Well, there is a lot to be said for timing capital expenditure to maximise the tax relief.
Article provided by Burgis & Bullock - www.burgisbullock.com
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