Autumn Statement Delivers Significant Capital Allowance Increase

This time last year many farm businesses were staring at a reduction to £25,000 in the Capital Investment Allowance. In this weeks Autumn Statement George Osborne will now allow companies to claim 100% tax relief on capital investments upto £250,000. However this increase is only planned for the next 2 years.

The text below is taken from an article on the Telegraph website that summarises the changes:

Companies will enjoy a tenfold increase in the amount they can wipe off their tax bills for qualifying investments for the next two years, temporarily reversing a controversial move in the 2010 Budget.

Businesses will be able to write off up to £250,000 each year of investment in areas such as factory expansion, machinery and office equipment after George Osborne reversed the policy on so called “capital allowances”.

Despite his promise to support a “march of the makers” as he delivered the Budget two years ago, the Chancellor simultaneously cut capital allowances, with the annual investment limit on which relief was granted slashed from £100,000 to £25,000.

However, complaints from companies and bodies including the British Chambers of Commerce and manufacturers’ group the EEF inspired a change of heart in the Autumn Statement.

Andrew Gotch, of the Chartered Institute of Taxation, said: “This is a very generous increase that will be warmly welcomed by many small businesses.

“However we note it is only a temporary increase. Business would really welcome some stability in this area. In recent years the allowance has fallen from £100,000 to £25,000. Now it will rise to £250,000 before, apparently, coming back down to £25,000. Businesses like certainty above everything and the chopping and changing has been a problem.”

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