Caravan and holiday parks and other businesses have been offered a new tax-efficient opportunity to invest in equipment in a key Budget 2014 announcement.
Back in December 2012, the Autumn Statement included a tenfold increase in the Annual Investment Allowance (AIA), from £25,000 to £250,000, with effect from 1 January 2013 and continuing to the end of 2014.
In his March 2014 Budget, Chancellor George Osborne increased the AIA again, doubling it to £500,000 for all qualifying investment made on or after 1 April 2014 until 31 December 2015, after which it is expected to return to £25,000.
Expenditure under AIA qualifies for 100 per cent tax relief, enabling most businesses to offset investment in plant and machinery – including items such as computers, commercial vehicles and office furniture – against taxable profits.
There are also certain fixtures in buildings, and integral features in buildings, that qualify, such as electrical systems, including lighting, water systems, air cooling systems and lifts.
Businesses that want to maximise the value of the higher level of AIA need to be aware that where accounting periods straddle the date of changes to limits, there are some complex transitional rules in place.
While the increased AIA threshold will be welcome, businesses will need to plan carefully to optimise the available tax relief.
Milsted Langdon can provide expert advice on how the increased allowance could benefit your business. For more information, please contact us.