Smart Tax Tips: Seizing Capital Gains Advantages and Equipment DeductionsFeb 05 2024
You might wish to consider bringing forward capital gains to before 6 April 2024 where you haven’t used your £6,000 CGT annual exemption. This exempt amount reduces to just £3,000 for gains made in 2024/25.
Capital Expenditure Planning
Unless the business year end is 31 March or 5 April, the end of the tax year is not a significant date as far as capital allowances are concerned. For new equipment to attract capital allowances, the expenditure must be incurred on or before the end of the accounting period. Limited companies buying new (not second hand) equipment are entitled to fully expense the cost of most acquisitions against business profits. There is no financial limit on expenditure qualifying for this “full expensing” relief.
Unincorporated businesses are entitled to 100% write off for the first £1 million spent on new and used equipment in a 12-month period. This “annual investment allowance” (AIA) is also available to limited companies buying second hand equipment. The AIA does not apply to motor cars but there is a special 100% tax relief if you buy a new zero-emissions motor car.
Where equipment is bought under a hire purchase contract, the capital allowances outlined above are available on the full cost of the asset provided it has been brought into use by the end of the accounting period.