Budget 2014 – Capital Allowances

Annual Investment Allowance (AIA)

The AIA was temporarily increased from £25,000 to £250,000 from 1 January 2013 with the measure designed to stimulate growth and spending  in the economy. This temporary increase was intended to come to an end on 31 December 2014.

The Chancellor has however announced that to continue to support business investment he is doubling the AIA to £500,000 from 1 April 2014 for businesses liable to corporation tax, and from 6 April 2014 for those liable to income tax. This AIA qualifying limit will be available until 31 December 2015. The increased AIA means that 99.8% of businesses will receive 100% up-front relief on their qualifying investment in plant & machinery, particularly helpful to the manufacturing and agricultural sectors.

The AIA will revert back to £25,000 on 1 January 2016

 

Purchase of Commercial Property – Capital Allowances on Fixtures

Announced in Budget 2012, the “mandatory pooling” requirement comes into force on 1 April 2014. What this means is that in order for a purchaser to be able to claim capital allowances on qualifying fixtures within a property, the vendor must have pooled (not necessarily claimed) the qualifying expenditure – that is formally notify HMRC in a tax return.

If the vendor fails to pool their qualifying expenditure, it prohibits all future capital allowance claims on those fixtures. It is therefore important to seek advice and guidance when purchasing a commercial property.

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May 22

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