|Budget 2009 Commentary|
|Temporary return of first year allowances|
|Another year to carry losses back|
|Tipping the cashflow scales|
|Carbon-based company cars|
|Further obligations for internal company accountants|
|Preferring to be part of a group?|
|A simple option for VAT on property|
|2010 - a big year for football and VAT|
|Connected companies' loans|
|Developments on the green horizon|
|Foreign denominated losses|
|Gambling with the rules|
|Rates and limits|
|HMRC becomes more powerful|
For businesses investing in plant and machinery the Finance Bill 2009 will introduce a temporary first year allowance (FYA) of 40% for expenditure exceeding the £50,000 Annual Investment Allowance (AIA). This enables businesses to claim 40% of the costs incurred in respect of qualifying plant or machinery against their taxable profits. The FYA will be available on qualifying expenditure incurred within the 12 month period from the 1 April 2009 for companies and 6 April 2009 for unincorporated businesses. The FYA is applicable to those assets that would normally be entered into the main pool of expenditure which obtains a writing down allowance of 20%.
There are exclusions from the FYA, which include those assets that would not normally qualify for the main pool of expenditure, for instance those assets which are considered long life assets or integral features. In addition, cars and assets for leasing are excluded.
In the past FYAs have in certain circumstances been restricted to small or medium sized companies but it appears that this is not the case here. However, this will be clarified when the Finance Bill is published.
The AIA introduced in April 2008 will still be applicable. This is a 100% allowance which can be claimed in respect of the first £50,000 spent on plant and machinery and can include expenditure on long life assets and integral features. Expenditure incurred above £50,000 will be dealt with under the normal rules, with the FYA available on qualifying expenditure above the AIA limit. In effect, expenditure that would previously have received 20% relief in the next 12 months, will now receive 40% relief.