Budget 2016 – Capital Allowances

Capital Allowances

The Chancellor has largely resisted the temptation to tinker with the Capital Allowances regime, having made various changes as recently as the autumn Statements in December 2015. A change has however been made in relation to business within Enterprise Zones, as detailed below.

 

Extension of enhanced capital allowances (ECAs) for Enterprise Zones

ECAs in Enterprise Zones were introduced in 2012 for a five year period to 31 March 2017. This was extended for a further three years to 2020, giving eight years of ECAs from the original 2012 start date.  This enables businesses investing in new plant and machinery in ECA sites in Enterprise Zones to qualify for tax relief on 100% of eligible expenditure in the year it is spent, regardless of whether it is inside the Annual Investment Allowance limit (currently £200,000).

The change in the March 2016 budget is to extend this eight year period to start from when the Enterprise Zone is announced.  The will therefore extend the period of the ECA site in Carlisle’s Enterprise Zone at Kingmoor Park to 25 November 2023, being eight years’ from its announcement in the Chancellor’s 2015 Autumn Statement. So the Budget 2016 announcement only starts to have an impact with effect from 2020 when the original eight year period was due to run out, although it does strengthen the longevity of Carlisle’s Enterprise Zone.

 

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Nov 20

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