Unlocking Special Capital Allowances

One area that often goes overlooked is special capital allowances available to Limited Companies for tax purposes. If you are intending on investing in your business by purchasing capital assets i.e. machinery, renovating a building etc., please contact us and we will assist you in understanding these allowances.

In this blog post, we will explore the various types of special capital allowances that can be claimed:

A)    Research and Development (R&D) tax relief:

If your business invests in qualifying research and development activities, you may be eligible to claim R&D allowances. This can be a very complicated claim and requires a lot of documentation and record keeping. Talk to us if you are thinking of investing in Research and Development for your business

Research and Development (R&D) tax relief - GOV.UK (www.gov.uk)

B)   Annual Investment Allowance (AIA):

The Annual Investment Allowance is a valuable tax relief mechanism that enables businesses to claim full tax relief on qualifying capital expenditure in the year of purchase. The AIA threshold has varied over the years but is currently set at £200 000 from the 1st of April 2023.

By utilizing the AIA, you can deduct the full cost of eligible assets, such as plant and machinery, from your taxable profits, providing a significant boost to your cash flow.

Claim capital allowances: Annual investment allowance - GOV.UK (www.gov.uk)

C)    Structures and Buildings Allowance (SBA):

The Structures and Buildings Allowance provides tax relief on qualifying capital expenditure for new non-residential structures and buildings.

This allowance allows businesses to claim a percentage of their construction or renovation costs over a 33.3 years and the rate is 3% per annum. The relief is available from when the structure or building is brought into use for the first time for a qualifying activity. You can only claim relief on the building and not on the land.

Let us know if you are planning on investing into any capital assets and we can provide you with guidance in terms of tax.