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Big Changes to Tax Relief on Plant & Machinery

Back in June 2010 the Chancellor announced changes to the way in which tax relief is obtained on purchases of plant and machinery used in your business – and guess what? It wasn’t good news!

The changes were deferred until April 2012 and, as we rapidly approach this date, we at robinson+co are keen to ensure that our clients benefit from the more advantageous rules in the next 3 months.

The headline announcement was that the “Annual Investment Allowance” is to reduce from £100,000 to £25,000. This means that instant tax relief will be drastically reduced and, although the allowance will be applied on a pro rata basis where your accounting period straddles April 2012, the nitty gritty of the rules means that you will be penalised if purchases in excess of £25,000 are made after the changeover date but before your accounting date.

Victoria Bishop, Tax Partner at robinson+co says “Please contact us if you are thinking of purchasing any new equipment at all in the next few months; discussing the purchase with me - or any of us here at robinson+co – could mean that we can help you take advantage of the change in rules and ensure you get the maximum tax relief.”

Victoria continues to explain that it is not enough to simply order the new equipment before April 2012. Tax rules say that you are not allowed to claim the expenditure until the “obligation to pay becomes unconditional.” This means you have to be careful when the lead time is over 4 months. “Again,” says Victoria, “contact us on 01900 603623 or 01946 692423 to make sure the transaction is arranged in the most tax advantageous way.”

And the bad news doesn’t stop there. At the same time the annual tax allowances on plant and machinery are decreasing from 20% per year to 18% per year. This means that getting full tax relief could take a minimum of 16 years if it is not possible to claim the Annual Investment Allowance!

These changes will have an impact on the tax payable by your business so take advantage of the expertise and experience at robinson+co to structure your purchases efficiently.

As well as by telephone, Victoria can be contacted on victoriabishop@robinsonco.co.uk

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robinson+co is registered to carry on audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.

robinson+co is a trading name of robinson+co (Gosforth) Limited registered in England & Wales 08088245. Registered office Oxford Chambers, New Oxford Street, Workington CA14 2LR. Regulated by the Institute of Chartered Accountants in England & Wales for a range of investment business activities.
robinson+co Financial Services Limited is registered in England & Wales 07272147. Registered office Oxford Chambers, New Oxford Street, Workington CA14 2LR. Authorised and regulated by the Financial Conduct Authority firm number 597189.

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