Businesses considering investing in new plant or equipment should act this year or face a new tax hit.
The warning comes from Andy Richens, technical tax director at South West accountants Bishop Fleming. He points out that the Coalition Government has already announced its aim to create the most competitive corporate tax system in the G20, with a one per cent reduction in both the small company rate to 20 per cent and the main rate to 27 per cent from this April 1.
Chancellor George Osborne’s Autumn Statement also confirmed the proposal to reduce the main rate by a further one per cent every year, down to 24 per cent on April 1, 2014.
“The obvious fear is that these reductions are simply recovered from other reliefs,” said Mr Richens.” For example, the Budget proposed reducing the annual investment allowance, which provides a 100 per cent deduction for capital expenditure on plant and machinery, from £100,000 to £25,000 from April 2012.
“This delivers a simple signal for South West business owners: if you need to invest in new plant and equipment, do it over the next 12 months to capture the current tax benefit. If you delay, you could lose out on that benefit.
“For the next year, capital expenditure of up to £100,000 will be tax-deductable: thereafter, that sum reduces to just £25,000.”
