Budget 2009 – Capital Allowances
Since 1 April 2008 (corporation tax) and 6 April 2008 (income tax) most businesses that invest up to £50,000 on certain plant and equipment can write off the entire amount against their taxable profits. Any excess expenditure, over the £50,000 limit, is added to the pool of unrelieved expenditure and has qualified for a writing down allowance of 20%.
The Chancellor has now announced that to encourage investment he will create a temporary first year allowance of 40% which will be applied to the excess of qualifying expenditure over the £50,000 limit. The new 40% allowance will be available for just one year, from 1 April 2009 (corporation tax) and 6 April 2009 (income tax) and will apply to assets which would be added to the main capital allowance pool except for cars and assets used for leasing.