With the deadline for the new reduced tax allowances fast approaching farmers & landowners should urgently consider the timing of 2012 capital expenditure, to maximise the reliefs available, say Saffery Champness
Mike Harrison, a partner of Saffery Champness Landed Estates & Rural Business Group, says: "Whilst taxpayers are currently able to obtain a 100% relief for investment in plant and machinery up to £100,000, known as the Annual Investment Allowance (AIA), this reduces to only £25,000 from April 2012.
"Also, from April, any excess capital expenditure will only benefit from a writing down allowance, and that writing down allowance rate is also set to reduce. From April 2012 this will reduce down to 18%. For specific items including features integral to a building where lower rates apply this is reducing from 10% to 8%.
"Where a business has a year end that does not coincide with the tax year, the AIA is apportioned. For example a 30 June 2012 year end the AIA available in the year will be £81,250 (9/12 x 100,000 + 3/12 x 25,000)", explains Mike Harrison.
"Furthermore in the part of the accounting period falling after April 2012, only a maximum of £25,000 would be covered. The period as a whole attracts relief of up to £81,250, but for expenditure, in the above example, on plant and machinery in excess of £6,250 this should be purchased before April 2012 as full 100% relief on expenditure in the period between April and June 2012 is restricted to this limit with the balance only receiving relief at 18%. Those businesses that are considering any major equipment purchases would be well advised to consider the timing of these, to maximise the allowances available. AIA is invariably a complex matter and it is always sensible to take professional tax advice when assessing any allowance" Mike Harrison concludes.
