Government ‘U-Turn’ will make it a Happy New Year.

Government ‘U-Turn’ will make it a Happy New Year.

The Autumn Statement saw the coalition government make a series of ‘u-turns’ when it came to tax policies. The biggest reversal, being,the decision to increase the Annual Investment Allowance (AIA) after previously reducing it from £100,000 to £25,000, which came into effect during April this year.

From January 1, 2013, the Annual Investment Allowance will increase from £25,000 to £250,000 for two years (this will decrease to £25,000 again at the start of 2015). We see the next two years as the perfect opportunity for small to medium sized businesses to invest in plant and machinery. The plan is, the extra investment will allow businesses to expand and grow, enabling them to create new jobs and, therefore, having a positive impact on the economy.

Any new expenditure on plant and machinery qualifies for AIA, with the exception of the following:-

  • Cars
  • Plant and machinery used for leasing purposes
  • Plant and machinery previously used for another purpose e.g. a computer used at home and introduced to your business
  • Plant and machinery gifted to your business
  • Expenditure incurred in the accounting period in which your business ceases.

For more details of the AIA increase, we have provided a link below to the HMRC website. A document has been released to download detailing the proposal.

http://www.hmrc.gov.uk/tiin/2012/tiin1278.htm

Overall, we believe this will be a welcomed tax incentive to encourage business investment, especially in smaller businesses. Our advice would be to take advantage of this increase when it comes into effect on January 1, 2013 and to seek professional guidance before proceeding.

For further advice on how this change impacts you, please contact us on  0845 365 1000 or email help@hsj.uk.com  to arrange a consultation.