The latest outlook for Capital Allowances

Capital allowances are important for any business, serving to improve cash flow, bring down investment costs, and lower the tax liability.

But drill into the detail, and the regime is complex, and changes taking effect this year only add to the complexity.

We look at the latest position here, with a focus on the area that matters most to the majority of businesses: plant and machinery allowances.

Why capital allowances are important

Capital allowances allow businesses to set the cost of qualifying capital assets against taxable profits. In general terms, for a company paying Corporation Tax at 25%, capital allowances have the potential to create a tax saving of £2,500 on a qualifying spend of £10,000.

Such allowances take the place of commercial depreciation, which is not allowed for tax.

Download our free guide The latest outlook for Capital Allowances