There are only a few months left for businesses to take advantage of the increased Annual Investment Allowance (AIA).
The AIA was increased from £25,000 to £250,000 for a fixed two-year period in 2013, and then extended again by the Chancellor George Osborne during the 2014 budget, until the end of 2015.
The AIA allows businesses to purchase qualifying assets that can potentially be deducted in full against taxable profits in the year of purchase.
It means that following the purchase of an asset, the business’s next tax demand could be substantially reduced, thus providing a significant boost to cash flow.
CEO of Close Brothers Asset Finance, Mike Randall said: “I would like to urge businesses to consider the impact of an increased Annual Investment Allowance now as it could revert to a lower level come 2016.
“This policy makes it easier for businesses to pursue capital investment with a significantly reduced level of financial exposure. Depending on the timing of the investment, the temporary increase in AIA means that many businesses are able to bring forward the tax relief on their asset purchases.
“We see the increased AIA as a very positive initiative. Essentially it provides an incentive for business investment in equipment, and the knock on effect is that it also helps suppliers and manufacturers by increasing their order books,” he added.
Businesses seeking advice on the benefits of increased AIA and guidance on how to claim it before the end of 2015 should contact their accountant or tax adviser.