On The Spot Blogs
Final Chance For The Best Tax Relief When Buying Machinery
And a few other assets.......
April 2012 sees the end of 100% capital allowances tax relief for annual spend up to £100,000.
What am I talking about?
This is the amount your business can spend on plant and machinery and receive 100% of tax relief in the same year. Normally, the tax relief is spread over about 15 years!
For March 2012 year ends, if your profits are £200,000 and you spend £100,000 on a new machine, your corporation tax bill is reduced from £40,000 to £20,000. After April 2012, this will be reduced to £25,000 plus 20% of £75,000 = £8,000.
If you enter into a contract to buy the machinery before April 2012, you can therefore achieve an extra £12,000 of cash flow to help grow your business.
You don't even need to have the cash leaving your bank account before April 2012.
There are important transitional rules when your year end isn't March, but the basic point remains that it is likely to be better to enter a contract before March 2012.
Do contact us if you think you might benefit from acting on this tax relief before it goes.