Claiming tax relief on your capital expenditure

Capital allowances are the tax deduction your business obtains for depreciation and losses on disposal of assets - usually cars, plant, machinery and equipment - used in the business. They are available at a variety of rates, depending on the nature of the asset and the size of your business - ask us for details.

The end of the tax year on 5 April 2009 and the end of your accounting year will govern when tax relief can be claimed.

A purchase just before the end of the current accounting year will usually mean the allowance is available a year earlier than would have been the case, had the purchase been made just after the year end. Similarly, the disposal of an asset, particularly a car costing more than £12,000, may trigger an earlier claim for relief or even an additional charge to tax.

Care needs to be taken - the date expenditure is incurred is critical to the timing of tax relief.

The rate of the 100% relief extends to the first £50,000 of qualifying capital expenditure with the exception of cars.