Any local business contemplating capital investment in new plant or equipment should make that investment in the next 12 months to avoid a new tax-hit.
That is the warning from Andy Richens, technical tax director at accountancy firm Bishop Fleming.
He points out that the Government has announced its aim to create the most competitive corporate tax system in the G20, with a 1% reduction in the small company rate to 20% and the main rate to 27% from April 1.
The Autumn Statement confirmed the proposal to reduce the main rate by a further 1% per year, down to 24% from 1 April 2014.
“The obvious fear is that these reductions are simply recovered from other reliefs,” said Richens.
“For example, the Budget proposed reducing the annual investment allowance, which provides a 100% deduction for capital expenditure on plant and machinery, from £100k to £25k from April 2012.
“This delivers a simple signal for south west business owners: if you need to invest in new plant and equipment, do it over the next 12 months to capture the current tax benefit. If you delay, you could lose out on that benefit.”
