Practitioners need to be aware of an important restriction with regard to the new Annual Investment Allowance (AIA) for qualifying capital expenditure incurred on or after 6 April 2008 (1 April 2008 for companies).

The £50,000 AIA is available to almost all businesses with the specific exception of mixed partnerships. A mixed partnership is a partnership that is not comprised solely of individuals.

So, for example, an accountancy partnership that includes a corporate partner would not be eligible for the AIA.

With the loss of most first year allowances (FYA), this will result in all capital expenditure incurred after the date of change being allocated into the 20% or 10% pool, with no first year boost.

A possible planning tool will be to optimise any short life asset election claims available to the mixed partnership. This will boost balancing adjustments on disposal, which may partially compensate the loss of FYA up front.

SWATUK Training Course

SWATUK have developed a new 45 minute training course on the new capital allowances regime to help practitioners get up to speed with the new requirements.

To find out more about this course, please click here.

Sharon Cooke
May 2008