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Capital allowances changes

A number of tax changes take effect for companies from 1 April 2012 (from 6 April 2012 for sole traders and partnerships) to the amount of capital allowances that can be claimed by businesses.

Capital allowances are the tax relief that a business obtains on capital expenditure.

The changes are:

  • The Annual Investment Allowance reduces from £100,000 to £25,000 per year. This has been explained in my previous blog post; please click here for more details
  • The writing-down allowance claimable on expenditure will reduce from 20% to 18%
  • For long-life assets, the writing-down allowance reduces from 10% to 8%

These changes have all been announced in previous budgets; there are expected to be further changes announced in the budget on 21 March 2012 which will be covered in my next blog.

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