Legal Focus Autumn 2015 – Capital Investment
With confidence continuing to return to the economy we are beginning to see more practices making substantial investment in their IT systems and other areas of infrastructure.
For some practices the capital allowances Annual Investment Allowance (AIA) allows a 100% write off of this expenditure for tax purposes when incurred, currently up to a maximum of £500,000 in a 12 month period.
The AIA was all set to reduce to £25,000 with effect from 1 January 2016, but it was announced in the Summer Budget that it would instead reduce to a permanent level of £200,000 from that date.
For those planning their capital expenditure over the longer term, having a permanent AIA will be make things easier, especially since it has been set at six different levels over the past eight years!
Although the AIA effective from 1 January 2016 will be higher than previously announced, care must still be taken where practices are planning expenditure on equipment in the coming months.
Transitional rules apply where there is a reduction in the AIA, and for accounting periods spanning the change the AIA available will most likely be lower than£200,000 for expenditure incurred after 31 December 2015.
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