Capital Allowance loophole ended
Published on 13/09/2011
New capital allowances legislation is to be introduced in the 2012 Finance Bill to take effect from 12 August 2011. The legislation which had been proposed to take effect from April 2012 has now been brought forward and will close the capital allowances loophole that allowed businesses to claim early tax relief through the acceleration of first-year capital allowance claims for plant and machinery.
The loophole was closed early as the Government were concerned that not doing so could lead to the loss of significant revenue to the Exchequer. Effective from 12 August 2011 companies will no longer be able to get early tax relief by accelerating capital allowances claims for plant and machinery.
The Economic Secretary to the Treasury commented that 'The Government is determined to reduce tax avoidance in order to protect the Exchequer, which provides funding for public services, and maintain fairness for the taxpayer. By ending this loophole today we will preserve important revenue while maintaining a fair system of capital allowances to support business investment'.