The Annual Investment Allowance is the amount that a company can obtain a 100% write down against its profits each year for qualifying expenditure on items such as plant and machinery etc. The current level of Annual Investment Allowance is set to fall from £500,000 to £200,000, to take effect from 1 January 2016. Please be aware that any expenditure incurred after 1 January 2016 you would not be entitled to a £200,000 write down. Due to the calculation rules relating to accounting periods straddling 1 January 2016, the allowable expenditure can be very low indeed. If you are planning of this type of expenditure then it may be more beneficial to do this before the end of the year.
For example, if a client company with an accounting year end of 31 January 2016 incurs expenditure before 31 December 2015 they can claim capital allowances of up to £458,333, but if they leave it until 1 January 2016 they could only claim a maximum of £16,667. Similarly, if a client company with an accounting year end of 31 March 2016 incurs expenditure before 31 December 2015, they can obtain capital allowances of up to £375,000, but if they leave it until 1 January 2016 they could only claim a maximum of £50,000.
The timing of the expenditure can therefore make a lot of difference. Perhaps a spending spree is needed now!
Please contact us if you would like to discuss this in more detail.