Winners and losers in the shake up to company tax and capital allowances
| Published: 5th June 2008 15:19 |
Capital allowance changes - what is all the fuss about?
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 - http://www.burgisbullock.com/
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