For businesses that claim capital allowances (the tax allowances for depreciation of plant and equipment which can sometimes include building fittings), there are changes in the pipeline that make those allowances a lot less generous.

At the moment, most businesses can write off the first £100,000 of expenditure in any year in full. If they spend more than this, the excess is added to a “pool” and written off over a number of years.

From 1 April 2012, the figure that can be written off in full in any year will drop to only £25,000. And the period for writing off any excess will be extended too.

If you typically spend less than £25,000 in any year on equipment, this change won’t affect you. But if you spend more, there can be significant advantages in bringing forward expenditure to March 2012 that would have happened afterwards. There is no point in buying equipment that you don’t need, just for the sake of the tax saving; but if you were planning on buying it anyway, purchasing before the end of March might save you tax.

If you’re not clear how this will affect you, call us to discuss.