• At-a-glance
• Administration Of Tax
• Personal Taxation
• Employment Taxation
• Business Tax
• Capital Allowances
• Corporation Tax
• Capital Gains Tax
• Inheritance
• Savings and Investments
  
• Pensions
  
• Charities
  
• Anti-Avoidance
  
• Stamp Taxes
• Value Added Tax
• Excise Duties
• Miscellaneous

CAPITAL ALLOWANCES

Annual Investment Allowance: Reduction to £25,000

The maximum amount of Annual Investment Allowance, which enables businesses to claim full tax relief on most plant and machinery expenditure in the year it is incurred, is to be reduced from £100,000 to £25,000. The decrease in the limit will apply from 1 April 2012 for businesses within the charge to corporation tax and 6 April 2012 for businesses within the charge to income tax.

Transitional rules will apply to businesses that have a chargeable period that spans the operative date of the decrease.

Writing-down Allowances: Reduction from April 2012

Finance Act 2011 will introduce legislation to reduce the rate of writing-down allowance (WDA) on the main rate pool of plant and machinery expenditure from 20% to 18%. The rate of WDA on the special rate pool of plant and machinery expenditure will be reduced from 10% to 8%. The provisions will have effect for chargeable periods ending on or after 1 April 2012 for corporation tax, and on or after 6 April 2012 for income tax. Businesses whose chargeable period spans the date of the change will have a hybrid rate for the whole of that transitional chargeable period, calculated on a pro-rata basis. Oil and gas ring-fence activities will retain their existing capital allowances treatment.

Short-life Assets

Legislation will be introduced in Finance Act 2011 to enable businesses incurring expenditure on an item of plant or machinery from April 2011 onwards to make a short-life asset election in respect of that item if they expect to sell or scrap it within an eight-year cut-off period. This is an extension from the current four year period.

Enhanced Capital Allowances for Energy-saving Technologies

The list of technologies which qualify for enhanced capital allowances will be amended to include certain energy-efficient hand dryers. The criteria for automatic monitoring and targeting equipment will also be revised. The changes will have effect on and after a date to be appointed by Treasury Order to be made prior to the summer 2011 Parliamentary recess.

Generating Equipment

The Government is proposing to introduce legislation to clarify the capital allowances treatment of generating equipment installed by businesses under the feed-in-tariffs and renewable heat incentive schemes. A consultation document is to be issued in May 2011.

Enterprise Zones

The Government has announced the creation of 21 new Enterprise Zones.

Anti-avoidance

Current capital allowances anti-avoidance legislation applies to transactions where the sole or main benefit is one of obtaining an allowance. The Government intends to change this test to one that is in line with effective anti-avoidance tests elsewhere in the Taxes Acts.

Fixtures Mandatory Pooling

The Government will consult on plans to introduce changes to the capital allowances fixtures rules requiring that businesses must pool their expenditure on fixtures in a building within a short period of acquiring the building, in order to qualify for capital allowances.