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.