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Capital Allowances

Unlocking the hidden value in your business assets is crucial for financial success, and that's where Capital Allowances come into play. In the UK, Capital Allowances provide a means to claim tax relief on eligible business expenditures, allowing you to reduce your taxable profits.

At Stamford Cromwell, we specialise in navigating the intricacies of Capital Allowances to ensure that your business maximises its potential benefits. Our expert team analyses your capital expenditure, identifying qualifying assets and expenses that can be leveraged for tax relief. Whether it's plant and machinery, integral features of a building, or renovations, we work diligently to optimise your claims and enhance your financial position.

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What Are Capital Allowances?


In the UK, Capital Allowances are a way for businesses to claim tax relief on certain types of capital expenditure. These allowances enable you to deduct the cost of qualifying assets from your taxable profits, reducing your overall tax liability. The primary purpose is to provide an incentive for businesses to invest in assets that contribute to their operations.

Here's a basic overview of how Capital Allowances work:

 

Qualifying Assets: Capital Allowances apply to certain types of business assets, including machinery, equipment, vehicles, and, in some cases, property-related expenditures.

 

Claimable Expenditure: The cost of acquiring, building, or improving qualifying assets is considered claimable expenditure. This can include the purchase price, installation costs, and certain fees associated with the acquisition or improvement of the asset.

 

Writing Down Allowance (WDA): Most assets are eligible for a Writing Down Allowance, which means the cost of the asset is deducted from profits over several years. The rate of the allowance depends on the type of asset, and it's applied annually until the entire cost has been claimed.

 

Annual Investment Allowance (AIA): The AIA allows businesses to deduct the full cost of qualifying expenditure (up to a specified limit) from their taxable profits in the year the expenditure is incurred. This provides an immediate and substantial tax benefit for businesses making significant capital investments.

 

Balancing Allowances and Charges: If you sell or dispose of an asset before the full Writing Down Allowance has been claimed, you may be eligible for a Balancing Allowance. Conversely, if you sell an asset for more than its book value, you may incur a Balancing Charge.

It's important to note that navigating Capital Allowances can be complex, and the specific rules and rates can change. Seeking professional advice, such as that provided by Stamford Cromwell, can help ensure that your business optimizes its claims and stays compliant with current regulations.

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