Starting out and capital allowances

I have just started my own business and have invested quite heavily in new equipment and vans. Can you tell me what tax relief I can get on my capital spend please? I think the business will generate a loss this year, but I’m hoping to turn a profit next year.

1st February 2012

From the details you have given, it sounds as if your capital expenditure will be eligible for the Annual Investment Allowance (AIA). This means that subject to the AIA in operation during your year end, you may get up to 100% tax relief in the year of purchase on qualifying assets.

However, in your circumstances it may be beneficial not to claim your full AIA entitlement this year. Instead, you could opt to restrict your AIA claim, and claim allowances against the surplus in the following year.

This way, you can manipulate your loss and AIA claim in such a way that you utilise them against your income being taxed at the higher rates.

Starting out in business can be daunting, so feel free to meet with your local TaxAssist Accountant to talk this through.


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.

Call us today to make an appointment at your local office

0800 0523 555

Or submit an enquiry