capital allowances

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Capital Allowances

A reduction in a company's corporate tax in order to encourage it to make capital investments. In general, when a company buys capital assets or makes some other long term investment, its corporate taxes are reduced by some amount over and above what the depreciation on the asset would have been. This amount is called the capital allowance.

capital allowances

standard allowances, for TAXATION purposes, against expenditure on FIXED ASSETS by a firm in lieu of DEPRECIATION. In the UK currently (as at 2004/05) a 25% ‘writing-down allowance’ against tax is available for firms which invest in new plant and equipment. Additionally in the case of small and medium-sized firms a 40% ‘first year allowance’ is available for INVESTMENT in new plant and equipment and a 100% tax write-off (for the three year period 2000/03) for investment in computers and e-commerce. A business may choose its own rates of depreciation for fixed assets which may differ from the statutory capital allowances. Capital allowances may also be varied by the government to encourage or discourage capital INVESTMENT. See DEPRECIATION, CORPORATION TAX.

capital allowances

‘write-offs’ against CORPORATION TAX when a FIRM invests in new plant and equipment. In the UK currently (as at 2004/05) a 25% ‘writing-down allowance’ against tax is available for firms that invest in new plant and equipment. Additionally, in the case of small and medium-sized firms, a 40% ‘first-year allowance’ is available for investment in new plant and equipment and a 100% tax write-off for investment in computers and e-commerce.

Capital allowances are aimed at stimulating investment, thereby increasing the supply-side capabilities of the economy and the rate of ECONOMIC GROWTH. See CAPITAL GOODS, DEPRECIATION 2.

References in periodicals archive ?
While the Enhanced Capital Allowance goes someway to doing this, we believe the government needs to look at improving this initiative.
Johnston Carmichael partner John Todd said: "Michael's appointment means that we now have an in-house surveyor to add expertise to our capital allowance team, which will allow us to really add value to our clients' commercial property projects.
The granting of capital allowance to industrialists in Nigeria is intended to support strategic investments in critical sectors of the economy.
Improvements to capital allowances, bank lending, and corporation tax rates, set against the background of a growing manufacturing sector should give us all reasons for good cheer.
The ACE is essentially a higher capital allowance, restricted to investment financed by equity rather than by debt.
Robertson Grey prepares Capital Allowance Valuations throughout the UK, led by Chartered Building Surveyors, for clients ranging from single property owners to large corporate real estate organisations.
The Water Technology List details all the water efficient products meeting the criteria of the Enhanced Capital Allowance scheme for water.
NFU Cymru was disappointed at the lack of capital allowance incentives for new farm infrastructure.
Sometimes they miss potential capital allowance claims because this is outside the scope of their typical experience.
It is currently in discussions over potentially up to pounds 100m to support the zones in capital allowances. So far only the enterprise zone in Flintshire in North Wales has been given capital allowance support.
Capital allowances - also known as writing down allowances - will decrease from 20% to 18%, while the special capital allowance rate will be cut from 10% to 8%.
PRACTICE MANAGERS and owners are being warned by the FMO to take note of next April's changes in Capital allowance, which include a reduction in annual investment allowance from 100,000 [pounds sterling] to 25,000 [pounds sterling].

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