Help With Capital Allowance
Capital allowance refers to the tax relief provided by the government to businesses for the purchase of assets used in their trade or profession. The concept of capital allowance is often confused with depreciation, which is the reduction in the value of assets over time due to wear and tear. However, capital allowance is different from depreciation in that it is a form of tax relief that reduces the taxable profits of a business. We have devised this blog at Veritas Advisory to help with capital allowance and understand what can be claim and importantly, why you should claim.
Businesses that purchase capital assets such as plant and machinery, buildings, and cars for commercial reasons are eligible for capital allowance. The amount of capital allowance that a business can claim is determined by the type of asset purchased and the criteria laid out from the HMRC.
Annual investment allowance (AIA): This allows businesses to claim 100% of the cost of most plant and machinery in the year of purchase, up to a certain limit. The current AIA limit is £1 million per year, which means that businesses can claim up to £1 million in capital allowance for qualifying purchases in a single tax year.
First-year allowance (FYA): This allows businesses to claim 100% or 50% allowances in the year of expenditure. There are various types including the annual investment allowance, full expensing and first year integral features.
Writing-down allowance (WDA): This allows businesses to claim a percentage of the cost of other plant and machinery over a period of several years. The percentage that can be claimed depends on the type of asset and the length of time it is expected to be used.
Research and development (R&D) allowance: This allows businesses to claim an additional 100% deduction for qualifying R&D expenditure.
Capital allowance can be a major tax saving for businesses because it reduces taxable profits and thus the amount of tax owed. However, before making a claim, it is critical to check that all expenditure is eligible for capital allowance and to keep proper records of all capital spending.
Who are we?
Veritas Advisory is proud to be a leading advisory firm on capital allowance. We are passionate about helping our clients receive money back for their businesses on what can be claimed back. Whilst we know that claiming for capital allowance can feel daunting and time-consuming, you won’t have to worry about any part of the process.
If you’re a business owner or financial manager, you may be wondering how capital allowance advisors can help you. Here are just a few ways that working with a capital allowance advisor can benefit your business:
- Increased tax savings: A capital allowance expert can help you decrease your tax bill and enhance your cash flow by discovering all of the capital allowances that your company is eligible to. This can free up capital for reinvestment in your company, allowing it to develop and flourish.
- Improved compliance: Claiming capital allowances can be complicated and time-consuming, and failing to claim the right allowances can result in penalties and fines. A capital allowance advisor can ensure that your company complies with all tax requirements, lowering the risk of penalties and fines.
- Enhanced financial planning: You can make smarter financial judgements if you understand your company’s capital allowance condition. A capital allowance expert can assist you in planning for the future by identifying growth opportunities and outlining potential hazards.
- Expertise and experience: Capital allowance advisors are experts in their field, with years of experience in identifying and claiming capital allowances. They stay up to date with changes in tax regulations and can provide you with the latest insights and advice.
When choosing a capital allowance advisor, it’s important to look for a reputable firm with a track record of success. We are proud of the reputation we have accrued over the years for being a reliable and efficient capital allowance advisory firm to our clients and we welcome the opportunity to help you this year.
If you would like more information about our capital allowance advisory services, then please do not hesitate to get in touch. You can call us on 0203 1300 293 and we look forward to speaking with you soon. If you prefer, you can fill in our online enquiry form and once received, our team will be in touch with you to discuss further.