{"id":5692,"date":"2024-02-14T15:45:09","date_gmt":"2024-02-14T15:45:09","guid":{"rendered":"https:\/\/www.paperstone.co.uk\/News\/?p=5692"},"modified":"2024-02-14T17:55:10","modified_gmt":"2024-02-14T17:55:10","slug":"capital-allowances-how-businesses-can-save-money","status":"publish","type":"post","link":"https:\/\/www.paperstone.co.uk\/News\/articles\/capital-allowances-how-businesses-can-save-money","title":{"rendered":"Capital Allowances &#8211; How businesses can save money"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">What are Capital Allowances, and how does it benefit me?<\/h2>\n\n\n\n<div class=\"wp-block-media-text is-stacked-on-mobile\"><figure class=\"wp-block-media-text__media\"><img loading=\"lazy\" decoding=\"async\" width=\"600\" height=\"624\" src=\"https:\/\/www.paperstone.co.uk\/News\/wp-content\/uploads\/2024\/02\/office.png\" alt=\"Office\" class=\"wp-image-5695 size-full\" srcset=\"https:\/\/www.paperstone.co.uk\/News\/wp-content\/uploads\/2024\/02\/office.png 600w, https:\/\/www.paperstone.co.uk\/News\/wp-content\/uploads\/2024\/02\/office-288x300.png 288w\" sizes=\"auto, (max-width: 600px) 100vw, 600px\" \/><\/figure><div class=\"wp-block-media-text__content\">\n<p>Capital Allowances are a way for a business to claim tax relief back for any investments they\u2019ve made in their business over a specified period. The main benefit of this is that it reduces a business\u2019s overall tax payable. <\/p>\n\n\n\n<p>It\u2019s the government&#8217;s way of thanking you for investing in equipment and machinery, and giving you a little something back for doing so \u2013 perfect if you\u2019re planning on upgrading or expanding your office!<\/p>\n<\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Let\u2019s look at a simple example of the difference Capital Allowance makes to a tax bill:<\/h2>\n\n\n\n<p><strong>Without Capital Allowance factored in:<br><\/strong>Total profit for the year = \u00a3300,000<br>Total tax to be paid @ 25% on amount of \u00a3300,000 = \u00a375,000<\/p>\n\n\n\n<p><strong>With Capital Allowance Factored in<br><\/strong>Total profit for the year = \u00a3300,000<br>Investments made during the first year (10 office chairs, 10 bench desks, and 2 printers) = \u00a310,000<br>Capital Allowance = Profit minus any investments made = \u00a3290,000<br>Total tax to be paid @ 25% on amount of \u00a3290,000 profit = \u00a372,500<br><strong>This means that your tax bill reduces by \u00a32,500<\/strong><\/p>\n\n\n\n<p>It\u2019s important to keep a close record of all your purchases and investments during the claim period, including receipts and invoices. Also, document all the assets you currently have within your business that are eligible for Capital Allowance, and where you could look to invest further.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Who can claim Capital Allowances?<\/h2>\n\n\n\n<p>Almost any business that is subject to Corporation Tax &#8211; Limited companies, Sole Traders, Partnerships, and Limited Liability Partnerships (LLPs) can claim capital allowances. There are other types of Capital Allowances for unincorporated businesses, which you can speak to your tax specialist about.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What specified period can I claim for?<\/h2>\n\n\n\n<p>For Full Expensing, which will offer 100% first-year relief to businesses, this applies to investments made from 1 April 2023 until 31 March 2026.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What investments CAN be used to claim Capital Allowances?<\/h2>\n\n\n\n<p>Any tangible assets (also referred to as Plant and Machinery) that the company purchases, for example:<br>\u2022 Office equipment like <a href=\"https:\/\/www.paperstone.co.uk\/office-furniture\/desks\/c-2029\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>desks <\/strong><\/a>and <a href=\"https:\/\/www.paperstone.co.uk\/office-furniture\/office-chairs\/c-2001\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>chairs<\/strong><\/a><br>\u2022 Machines like computers and <a href=\"https:\/\/www.paperstone.co.uk\/office-machines-supplies\/printers\/l-2466\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>printers<\/strong><\/a><br>\u2022 Tools such as ladders.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What investments CAN\u2019T be used to claim Capital Allowances?<\/h2>\n\n\n\n<p>\u2022 Used or second-hand assets<br>\u2022 Cars<br>\u2022 Assets given to the company as a gift, or that will be leased to someone else<br>\u2022 Land and buildings.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Why was this introduced?<\/h2>\n\n\n\n<p>In the Spring 2023 budget speech, the UK Government announced the Capital Allowance offer, which would benefit businesses when paying tax. The government is encouraging businesses to do this, as investing strongly encourages productivity growth.<\/p>\n\n\n\n<p>In a Capital Allowance survey conducted last year, businesses showed a strong preference for the full expensing option over the other types under consideration, because of how simple and generous it is.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Where can I find out more?<\/h2>\n\n\n\n<p>Please refer to the <a href=\"https:\/\/www.gov.uk\/capital-allowances\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>gov.uk website<\/strong><\/a> or your financial\/tax advisor for further advice and guidance.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What are Capital Allowances, and how does it benefit me? Capital Allowances are a way for a business to claim tax relief back for any investments they\u2019ve made in their business over a specified period. The main benefit of this is that it reduces a business\u2019s overall tax payable. It\u2019s the government&#8217;s way of thanking [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":5695,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-5692","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-Uncategorized"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Capital Allowances - The Ultimate Guide for Businesses<\/title>\n<meta name=\"description\" content=\"Capital Allowances - claim back what&#039;s yours. Learn what qualifies, who can claim, and how to get started. 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