Budget 2018 - changes to Capital Allowances

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26 November 2018

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Corporate Tax Planning

There were some important changes to Capital Allowances in the Budget. There will be a "temporary" increase to the Annual Investment Allowance (AIA) from £200,000 per annum to £1 million per annum, for 2 years from 1 January 2019. AIA enables businesses to obtain 100% deduction in the year of expenditure for qualifying fixed assets additions.

Please note there are complex rules which are applied to calculate the entitlement to AIA in situations where an accounting period does not correspond to the calendar year.

Further changes to Capital Allowances

In addition, a new relief was announced called Structures and Buildings Allowance (SBA) for new non-residential structures and buildings. This relief is applied to the costs of construction incurred on or after 29 October. The building must be used in a trade, profession, vocation, UK or overseas property business, within 7 years of the expenditure. Relief will also be given to expenditure on renovation or conversion of existing buildings.

Unfortunately, this relief is unlikely to stimulate significant growth as it is only given at a rate of 2% per annum on a straight-line basis.

For help with Capital Allowances or any other tax advice, please call me on 0113 398 1136 or email me at ptwhitehead@hwca.com

For the main tax changes in the Budget and comments on the more important changes, read our Budget Summary