News: March 2012
Getting around the new restrictions to get 100% tax relief on buying equipment
As we mentioned in the February edition of Tax Tips & News, the £100,000 annual investment allowance reduces dramatically to £25,000 from 1 April 2012.
If that is a problem, and your company needs to spend, say, £40,000 in the year on equipment, one solution is to pay the extra £15,000 yourself in your capacity as an employee of the company. You then have your own £25,000 expenditure limit and you can claim full tax write-off against the income you receive from your company. This is because your employment is a qualifying activity for the purposes of capital allowances, provided we are NOT talking about cars, motorcycles or cycles.
You need to show that purchasing the equipment is a necessity for you to use in the performance of the duties of your employment, and that should not be a problem. Care is needed in getting the paperwork right.