What we already expected

The following changes have been well flagged by the Treasury and some of the draft legislation had already been produced in a technical note dated December 2007 under the heading ‘Business Tax Reform: Capital Allowances Changes’. Just as a short recap, the main changes are:-

• The phasing-out of industrial building allowances and agricultural building allowances by April 2011.
• Reduction to the rate of writing down allowances for general plant from 25% to 20% from April 2008.
• Increase in writing down allowances for long life assets from 6% to 10% from April 2008.
• Reduction in writing down allowances for machinery or plant that is classified as ‘integral features’ from 25% to 10% for expenditure incurred from April 2008.
• Annual Investment Allowance of 100% of the first £50,000 of expenditure on machinery or plant from April 2008; no first year allowance for small or medium size businesses from April 2008.
• Payable tax credit for Enhanced Capital Allowances (ECA) available to loss making companies from April 2008.

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