Capitalizing Your Business Investment
Running a business is definitely not a piece of cake with investments often ranging sky-high in numbers! Imagine, from workspace leases to process machinery, R&D equipment, hiring employees, sanctioning business vehicles- Investments can be overwhelming in nature! This is where Capital Allowances come into play, helping you claim tax relief for some of the long-term business asset investment! Now that we know the basics, let’s move into the details of what capital allowance is and how you can benefit from it.
Capital Allowances- Basics Explained
We are going to simplify capital allowances here by answering some of the frequently asked questions about this tax relief power move!
Who can claim Capital Allowance?
If you’re a sole trader, self-employed limited company, or working in partnership with other limited companies in the UK, you are eligible for this tax relief program. You can either make your claims through a company tax return or if you’re self-employed, you can add it with your annual tax return!
What can you claim as Capital Allowance?
Almost any business investment can be calculated under Capital Allowance, but here’s the only thing you need to remember- your investment should be mobile to be calculated under Capital Allowance! For instance, your office property will not be calculated under this allowance but everything from server setup to air conditioners, business vehicles, machinery, security systems, kitchen/ cafeteria/ common room fittings etc.
How much can you claim as Capital Allowance?
The claim amount depends on a wide number of variables and would thus vary from individual to individual. Depending on the amount spent, rate fluctuations or the type of asset in question, your claims can be divided into 3 primary allowance types, namely-
- The AIA or Annual Investment Allowances
- First Year Allowances
- Writing Down Allowances
How can Goodhams Accounting Help?
Claiming Capital Allowance can help your business reduce tax amounts, which is a huge benefit for businesses who are trying to maximize their profit. However, there are a lot of complicated strategies that work behind Capital Allowances. For instance, did you know, tangible investments will incur depreciation cost over the years, but depreciation expenses cannot be claimed as tax relief. Also, your claim amount will vary based on the 3 allowance types we have mentioned before! So how can you minimize complication and maximize tax relief? By shaking hands with a seasoned Accounting firm who can not only break down the complex variables for you, but also walk you through the process of investment management by helping you file, claim, and benefit from Capital Allowance.
The Goodhams Way
Our Accounting firm employs some of the best financial counselors, advisors, and accountants who are not only industry-accredited but also up-to-date with the latest changes in the financial law. This helps us equip ourselves better when dealing with a client’s financial books. Our strategic workflow module comes with a transparent understanding of your business and how we can help you make the best of your tax relief plans so that your finances can be by the book and favorable to your business growth.
Want to discuss Capital Allowances further with us? Contact one of our advisors with your query today.