The current generous tax treatment of plant and equipment is to change from April 2012. In the current tax year, a stand alone business can acquire new plant costing up to £100,000 and receive a full deduction of the cost from profit.
From April 2012 this annual allowance is to be reduced to £25,000 per annum. For those business with an accounting year end that does not coincide with the tax year, the tax relief available is dependent on the capital expenditure in each of the tax periods that straddle the accounting period.
If your capital expenditure in the year commencing 1 April 2012 is likely to exceed £25,000 you may wish to accelarate part of expenditure to the extent that you have any unused balance for 2010/11. Where the £25,000 threshold is exceeded 18% of the excess is deductible from profits.
If you do wish to discuss tax relief for capital expenditure please do contact Dennis Wren.