The amount of “up-front” tax relief which is available for capital expenditure on plant and machinery, equipment and fixtures and fittings (but not property assets) has been up and down like a yoyo for the last 4-5 years, and this year is no exception.

Having reduced the annual allowance to £200k from £500k in January 2016, the Chancellor announced in his Budget this week that it is going to be increased to the dizzy heights of £1m, allegedly for a “temporary” two year period from January 2019. This means that there will be much more scope for tax relief on capital projects where expenditure is incurred after 31 December 2018 and anyone considering significant amounts of such expenditure should seriously consider ways in which it can be deferred.

This is not entirely straightforward as the amount of relief available in a company’s accounting period will depend on the year end date, and therefore business owners need to take advice as to the timing of expenditure in order to maximise the amount of tax relief obtained.

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Author: Peter Hedgethorne, Director, Plus Accounting

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