{"id":923,"date":"2003-03-23T14:33:24","date_gmt":"2003-03-23T14:33:24","guid":{"rendered":"https:\/\/www.barnesroffe.com\/?post_type=topical-tip&p=923"},"modified":"2021-11-12T15:46:02","modified_gmt":"2021-11-12T15:46:02","slug":"capital-expenditure-planning","status":"publish","type":"post","link":"https:\/\/barnesroffe.com\/blog\/capital-expenditure-planning\/","title":{"rendered":"Capital Expenditure Planning"},"content":{"rendered":"

Every year the Chancellor of the Exchequer announces changes to the way that businesses obtain tax relief on their plant and equipment. The general rule is that the cost of plant is relieved against taxable profits by a writing-down allowance of 25% of the initial cost in the first year, and 25% of the remaining balance in each subsequent year. Special first year allowances exist to encourage businesses to invest in certain types of plant as follows:<\/em><\/p>\n\n\n\n\n\n\n
<\/td>\nRate of first year relief<\/td>\nSmall business<\/td>\nMedium business<\/td>\nLarge business<\/td>\n<\/tr>\n
Information and communications technology<\/td>\n100%<\/td>\nYes<\/td>\nNo<\/td>\nNo<\/td>\n<\/tr>\n
Other plant and machinery<\/td>\n40%<\/td>\nYes<\/td>\nYes<\/td>\nNo<\/td>\n<\/tr>\n
Certain energy saving plant and equipment<\/td>\n100%<\/td>\nYes<\/td>\nYes<\/td>\nYes<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(The definition of business size is as per the Companies Act 1985. Furthermore, a business must not be a member of a group that exceeds the size criteria.)<\/i><\/p>\n

Warning<\/b>\u00a0\u2013 the 100% first year allowances for information and communications technology are only available on expenditure up to 31 March 2003. There is no certainty that they will be extended beyond this date by the Chancellor.<\/p>\n

New reliefs<\/b><\/p>\n

Enhanced capital allowances are being introduced to extend the 100% relief for certain energy saving plant and equipment to three key areas:<\/p>\n

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  1. Further energy saving technologies \u2013 available for expenditure after 5 August 2002 (seehttp:\/\/www.eca.gov.uk<\/a>\u00a0for the government\u2019s detailed list).<\/li>\n
  2. Improving water use and water quality.<\/li>\n
  3. Cleaner vehicles and fuels (see below).<\/li>\n<\/ol>\n

    The biggest effect on many businesses may be in relation to expenditure on cleaner vehicles and fuels. Cleaner cars are those registered on or after 17 April 2002 with CO2 emission ratings of no more than 120gm\/km or are electrically powered. Relief will also be available for equipment for refuelling gas or hydrogen powered vehicles.<\/p>\n

    Barnes Roffe Topical Tips<\/p>\n