Special Report: RALPH MORTON
NO doubt the relief at seeing the planned 3p fuel duty rise for January bite the dust made you miss one of the key opportunities for a van operator to invest in new vans: the increase in the Annual Investment Allowance.
If this seems the sort language reserved for your accountant, then now’s a good time to go and speak to them to find out more.
Because the Annual Investment Allowance – a capital allowance that small businesses, sole traders and SME trades can claim – was raised from a barely useful £25,000 to a much more advantageous £250,000.
That means a wide variety of plant and machinery – most types of movable assets from combines to coaches, computers to cranes and cross-saws to commercial vans (but not cars) – will qualify.
The change in the Annual Investment Allowance announced in the Autumn Statement is from 1st January 2013.
Businesses running vans should take full advantage of the capital allowance tax break
Allan Ross, managing director of First Independent Finance, reckons that businesses running vans should take full advantage of the capital allowance tax break – and certainly hold off until January before making a new van purchase.
However, Allan warned that businesses should take advice from their accountants because the method of calculating the allowance is not straightforward.
“For example, if a builder had a year-end of 31st March, the maximum Annual Investment Allowance they would be able to claim on an asset bought in January 2013 will be only 1/4 of £250,000,” explains Allan.
“The same asset bought by another building firm with a year-end of 30th September would qualify for relief at 3/4 of £250,000. Any balance of expenditure not qualifying in the first year will be available for writing down allowances at reduced rates in future years.”
In other words, it’s not quite as easy as going out and buying two Vauxhall Vivaro panel vans at £19,048.33 each and writing off 100% of your assets against tax.
“No it’s not,” concurs Allan. “But the potential to save on tax for investment in assets like this should not be overlooked.”
Chief Executive of the Forum of Private Business, Phil Orford, shares the same enthusiasm for this new investment allowance.
“We urge businesses to take advantage of it. There are big savings to be had here for firms who’ve been waiting for the right time to invest and upgrade equipment, and this kind of spending tends to wash right down the supply chain.”
And that’s exactly the sort of capital investment the Chancellor wants to encourage to get the British economy moving again.
As ever, the SME business remains the engine room of the economy. Particularly those with business vans.