capital allowances

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capital allowances

a standardized method of giving relief for depreciation for tax purposes, only available for certain classes of capital expenditure. The most common qualifying categories of expenditure are on plant and machinery, industrial buildings and on agricultural buildings and works. Depreciation in the accounts is disallowed for tax purposes and is replaced by capital allowances on those assets which qualify. In order to encourage businesses to invest, there are sometimes generous rates of allowance in the period of acquisition (initial allowances or first-year allowances). Any remaining expenditure which has not been relieved is given by means of a writing down allowance at a specified percentage rate per annum. On a disposal, a comparison is made between the disposal value and the tax written down value so that an adjustment can be made to ensure that the total relief equals the reduction in value while the person owned the asset. If too little relief has been given, a balancing allowance is provided and where too much relief has been given, the excess is added to income and is called a balancing charge.
References in periodicals archive ?
No sooner had I written my last article about claiming capital allowances on business expenditure, particularly on "green" expenditure, then the Chancellor's announcements in last month's Budget forces a re-write to my article.
The existing Enhanced Capital Allowance scheme lets companies offset the cost of new energy-efficient machinery such as such as boilers, electric motors, air conditioning and refrigeration systems, but only in the first year.
In his new role, Murray will support Johnston Carmichael's commercial property clients on acquisitions and large building projects with a view to maximising capital allowance tax relief for property owners.
Keywords: Capital allowance, Investment economies, Nigerian manufacturing firms
Under the decision, the Capital Allowance worth Rs 1,000 will be paid to all of the CDA employees in pursuance of the Prime Minister's directive.
The widespread availability of good value redundant finishing plant and machinery, together with the increased capital allowance, means that companies' budgets can be made to go much further.
So far, the government plans to cut current capital allowances as part of its plan to reduce corporation tax.
The scheme enables Tennant customers food and drink, retail, warehousing and logistics, engineering and manufacturing among many other industries to claim 100% first year capital allowance on investments in technologies and products that encourage sustainable water use.
- The Uniform Capital Allowances system, which will reduce compliance costs by simplifying the many amortisation regimes currently in the law.
The simple `incremental' approach of giving higher allowances for investment in excess of the previous year's level is not only crude, but also largely ineffective--since higher investment and a higher tax allowance this year implies a higher base level of investment and a lower tax allowance next year, the effect on the cost of capital, even for firms whose investment is growing, is much weaker than the effect of a standard capital allowance at the same rate.(7)
Two chapters cover the economic effect of the AMT related to different industries and type of asset acquisition and comparing capital allowance schemes to other countries and how well the AMT has operated from a tax policy point of view in efficiency and fairness, and what should be considered to improve the pervasive and unexpected AMT impact.
What is the current capital allowance situation and how can we project investment over the next two to three years - in order to maximise capital allowances?

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