At the end of the current fiscal year, 5 April 2012 for income tax payers and 31 March 2012 for companies, the current level of Annual Investment Allowance is being reduced from £100,000 to £25,000.
If your accounting year end coincides with the fiscal year end this presents no computational difficulties as all qualifying expenditure, for the year ending 5 April (31 March) 2012, up to £100,000 will provide a 100% deduction for income tax and corporation tax purposes.
But what happens if your trading year end straddles the fiscal year end?
The short answer is that AIA relief is apportioned. In certain circumstances this can result in a loss of relief and higher tax bills.
Consequently if your trading year does not end 5 April (31 March) 2012, and you are contemplating significant capital expenditure in this period, please give us a call to discuss your tax planning options.
Sue Stephens
Tax Manager
