Capital Allowances Update – what next?

Given economic uncertainty surrounding Brexit and inbound investment, it has never been more important to ensure your tax reliefs are being maximised at each available opportunity

Businesses rely on the Capital Allowances Regime as their form of obtaining relief for their capital expenditure. In the Autumn 2018 budget, three significant changes were made:

1. Increase in the AIA

The government announced a temporary increase in the AIA from £200,000 to £1 million lasting until 31 December 2020, after which it will revert to £200,000.

From a manufacturing perspective, the increased AIA is something which is very much welcomed and has accelerated relief for numerous businesses across the UK.

2. Addition of the SBA

The government announced a new regime labelled the Structures and Buildings Allowance (SBA), which operates under a similar basis as the now-defunct Industrial Buildings Allowance (IBA).

This regime provides relief for capital expenditure incurred on all non-residential structural and building works which are not covered under the general plant and machinery allowances

For most of our manufacturing clients who tend not to relocate frequently this source of relief is very much welcomed and is something which should be discussed with one of our specialists.

3. Abolishing the ECA regime

The Enhanced Capital Allowances regime (ECA) provides 100% first-year allowances for the purchase of environmentally beneficial assets, or assets which contain environmentally beneficial components.

The relief will cease to exist for companies on 31 March 2020 and individuals on 5th April 2020. This means any expenditure incurred before these dates will qualify. So if you are considering the purchase of new machinery which may qualify for the accelerated relief, it is advisable to speak to us and we can provide advice from the outset.

This article featured in issue 6 of our Manufacturing and Engineering newsletter series, The Engine.

Read The Engine Issue 6

If you are considering any significant capital projects, please get in touch with a member of our team. We are able to provide advice on maximising claims on expenditure which qualifies for ECAs, structures and buildings and the timing of plant purchases to obtain the maximum relief available.