By: Neil Ritchie, Local Business Unit Manager, LV Drives at ABB
If you are planning on making an investment in energy saving equipment any time soon, now is the time. From April 2012, capital allowances on plant and machinery will be reduced from 20 percent a year to 18 percent and the £100,000 first-year annual investment allowance will be reduced to £25,000.
Capital allowances allow organisations to write off the cost of capital assets, such as plant and machinery against their taxable income. The reduction forms part of the government’s corporation tax reforms, which will see a phased reduction in the main rate of corporation tax from 26 percent to 23 percent.
Although I do welcome corporation tax reforms, I believe that it is vital that the government puts in place some sort of temporary funding for the capital allowance scheme until corporation tax reforms take effect. If not, I believe there is a significant risk that companies considering investing in energy saving equipment will freeze their investment plans.
My advice is, if you are going to make an investment in energy saving equipment, then doing it before the 1st April could save even more money for your company.