Caution is recommended as a possible £300,000 worth of business tax relief comes to an end this December. Business owners can expect to see some great deals on plant, machinery and commercial vehicles in the last few weeks of the year to reflect this change to the capital allowances rules.
If you haven’t been planning for this since the Summer Budget, however, don’t panic buy. There will still be £200,000 worth of annual tax relief available in the years ahead and disrupting your cash flow might have repercussions for the business further down the road.
Any tax break that provides a 100% tax deduction for your business in year one should have been central to your business planning all year round.
It was on 8 July 2015 that the Chancellor announced that Annual Investment Allowance would be cut to £200,000 from £500,000, and the benefit has been tapering down towards that level ever since depending on your year end. Businesses with a year end in the last quarter still have the full £500,000 allowance but, depending on the timing of your expenditure, this could fall straight back to £200,000 when the bells ring in the New Year.
By all means look at the deals on offer, and expectations of where interest rates may go will probably come into your reckoning, but allowing the tax tail to wag the commercial dog could compromise other areas of the business.
