Capital allowances - writing-down allowance rate changes
As previously announced at the Emergency Budget in June 2010, the rate of
writing-down allowances for main pool plant and machinery expenditure is to
decrease from 20% per annum to 18% per annum and the rate of writing-down
allowances for special rate pool plant & machinery is to decrease from 10% per
annum to 8% per annum.
Similarly, the current limit on the Annual Investment Allowance (AIA) will reduce from £100,000 to £25,000.
Who will be affected?
All businesses investing in plant & machinery.
The rates will change with effect from 1 April 2012 for corporation tax purposes and 6 April 2012 for income tax purposes.
The impact of this measure will be significant on most businesses, with a Net Present Value (NPV) reduction of 2.2% for main pool plant & machinery and 7.7% for special rate plant & machinery at an assumed discount rate of 5%.