Since the Chancellor announced plans to provide more tax aid to businesses in this year’s budget, a division of a West Yorkshire accountancy firm is reporting a dramatic increase in demand from businesses wanting to invest in new plant and machinery items.
Vicki Walker from Finance Brokerage LLP – part of Clough & Company – said:
“Thanks to George Osborne doubling the Annual Investment Allowance (AIA), businesses can now buy up to £500,000 of plant and machinery and enjoy maximum tax benefits.”
The AIA works as a capital allowance, which offers tax relief at 100 per cent on qualifying expenditure in the year of purchase.
“In the past the AIA was initially cut from £100,000 to £25,000 by the coalition.
“In 2012 it was then raised to £250,000 but this was due to end this December.
“Instead it has been doubled to £500,000 until next year and this is already having a major impact on what businesses are spending and investing in.
“In the last month alone we have received more enquiries from businesses operating in the manufacturing and construction sectors than during the last six months of 2013.
“These businesses were previously extremely cautious about spending, but the increase in the AIA has allowed them to take advantage of the tax benefits on offer and we are also sourcing finance for companies investing in everything from a printing machinery to construction equipment.”
The Government has stated that the increased AIA will mean that nearly all businesses could receive 100 per cent upfront relief on their qualifying investment in plant and machinery.
“The government needed to make it easier for small and medium sized businesses to access funding and gain significant tax benefits from their capital expenditure.
Now the AIA has been extended until 2015, businesses will no doubt take advantage of the allowances which will in turn help to stimulate growth in the economy.”