Capital allowances help you to reduce your tax bill, by allowing you to write off the cost of purchasing qualifying items against the taxable income of your business.
Since April 2014, businesses have benefited from generous capital allowances limits of up to £500,000 for investment in new plant, machinery and equipment – equating to significant tax savings.
It's a key part of the government's drive to get UK businesses investing and building for the future but it won't be here forever – the capital allowance limit falls to just £25,000 at the end of 2015 so it makes sense to start planning any investment now!
You can claim capital allowances for what your business spends on assets that it owns and uses in the business such as buildings and renovations, tools, machinery, office equipment, computers, vehicles, pieces of plant and factory equipment. You can also include professionals' fees in your capital allowance claim, for example architect fees or planning costs.
As with all capital allowances, there are conditions that have to be met before you can claim them. And you can't claim capital allowances for the things that your business buys and sells as part of its trade.
Different rules apply for when and how you can claim your capital allowances, depending on whether you are self-employed, a partnership or a limited company.
The key point to note is that time is of the essence as the current £500,000 limit is only here until the end of next year, so take care to ensure you can make any planned investments between now and December 2015.