Understand that the increase to the Capital Allowance limit was only temporary - dont lose out

Your 2014 Capital Expenditure Plan.


Are you using your Annual Investment Allowance?


Capital allowances are a form of tax relief and are available in respect of business assets. They can be offset against taxable profits in the year and can save money by reducing tax liabilities.


The Annual Investment Allowance (AIA) is a kind of capital allowance. As the name suggests this provides an annual amount that can be claimed in respect of expenditure on capital items. The qualifying expenditure can be claimed at a rate of 100% in the year of acquisition and therefore fully offset against your tax liability. Items purchased that do not fall within the allowance are pooled with other capital expenditure and the amount that can be claimed against tax in respect of them can take years to be fully realised.


It is best to take advantage of your Annual Investment Allowance where possible.


Why should I think about it now?


The Annual Investment Allowance was increased from £25,000 to £250,000 in an increase that took effect on 1 January 2013 and is in place to cover qualifying expenditure before 1 January 2015.


It is important to consider this now as the increase is temporary and due to return to £25,000 in January 2015. An alternative figure may be announced at some stage but that is not guaranteed. If we consider the “now you see it, now you don’t” nature of this allowance displayed by its history, it would certainly appear to be good advice to make use of it while it is available.

The AIA limit has changed several times since it was first introduced, as follows: 

2008- 2010                                                  £50,000

2010 – April 2012                                        £100,000

April 2012 – December 2012                       £25,000

January 2013 – December 2014                  £250,000

As can be seen now is a good time to consider how you use the allowance available to you.

We have also seen that when the amount available changes there have been some complicated transitional rules to contend with that haven’t generally been favourable to businesses. The calculation of the amount available where accounting years straddle the date of change can be tricky and it would be advisable to ensure you check the amount of allowance available in these circumstances.


Your checklist of action to take.



  1. Capital expenditure should be carefully planned and, although there appears to be plenty of time before the end of the temporary period, it would be advisable to put a capital expenditure plan in place to ensure that the right assets are acquired at the right time.


  1. Consider your expenditure plans for 2015. Are there any planned purchases that could be brought forward to utilise the higher allowance figure while it is available?


  1. Ensure that you are aware of the amount of Annual Investment Allowance available to you under the transitional provisions where your accounting year end straddles 1 January 2015. We can assist you in calculating this figure.


4.   Make an appointment with OBC The Accountants to discuss your capital allowances position.

or call me Lee Bowden now 01323-720555 for more advice








Get in touch for a free Consultation Today

Find out more