Tax Relief on Equipment and Vans

We have just started up a plumbing and heating business and we’re going to buy a small fleet of vans and bit of equipment- probably totalling in the region of £60,000. It’s been a while since I’ve run my own business, but I know you used to get 50% of the cost of equipment offset against your profits in the year of purchase and 25% each year thereafter. What are the rules now?  

1st October 2011

In 2008/09 the Annual Investment Allowance (AIA) of £50,000 was introduced, which applied to general plant and equipment. Expenditure up to the AIA can be written down by 100% in the year of purchase. Any expenditure in excess of that or assets brought forward are written down by 20% (writing down allowance). The AIA was increased to £100,000 from 2010/11.

Assuming your vehicles meet the HM Revenue & Customs definition of a ‘van’, they will qualify for the AIA.

Please note, from 2012/13 the AIA will reduce to just £25,000 and the writing down allowance to 18%. If your accounting period straddles two periods when the AIA was different, then the AIA will be prorated. So for instance, if your start date is 1 October 2011 and your period end is 30 September 2012, then your AIA will be:

(6/12 x £100,000) + (6/12 x £25,000) = £62,500

If you want to ensure you get as much tax relief as possible as early as possible, please feel free to contact your local TaxAssist Accountant who would be able to talk you through the Capital Allowances regime and work out the optimum time and amount to spend.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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