Planning the timing of your investment in assets in 2015 and 2016 could have significant tax benefits

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CogsAs we approach the end of 2014, it’s a great time to plan ahead for 2015 and even 2016 (if you’ve not already done so!).

There is a great opportunity for tax efficient investment in assets during 2015. Between April 2015 and December 2015, you can claim 100% of the cost of qualifying plant and machinery purchased, up to a total of £500,000 (pa pro rata).

From January 2016, this is set to reduce significantly down to £25,000 (pa pro rata), and therefore careful planning is needed in 2015 and 2016, as:

–       There are special rules where your accounting period straddles the different periods.

–       The deemed date of purchase may not be as straight forward as you believe.

Forward planning may also be needed to ensure that bespoke equipment or items with a long lead time are delivered at the right time, and that you have the finances in place to make the purchase.

An illustration of where poor planning could be costly to you and your business is as follows:


Company MM Ltd has a year-end of 31st March 2016.

Allowance for the 9 months to 31 December 2015 – £500,000 x 9/12 = £375,000

Allowance for the 3 months to 31 March 2016 – £25,000 x 3/12 = £6,250

You may therefore believe that MM Ltd has a total allowance for the period, which is true, but it is vital that assets are acquired at the correct time, due to a quirk in the rules:

–       In the 9 months to 31 December 2015, MM Ltd could spend £381,250 and claim 100% tax relief on the total spend. It would then have no allowance left for the 3 months to 31March 2016, but has maximised the relief available.

–       In the 3 month to 31 March 2016, MM Ltd can only spend £6,250 on which it can claim 100% tax relief.

As you can see, with purchases for the year of more than £6,250, MM Ltd should plan to acquire some assets prior to 31 December 2015 to get, rather than leaving acquisition until on or after 1 January 2016 when the 100% allowance will be restricted to £6,250.



This is a fantastic opportunity to reduce the cost of investing in your business. If you would like to discuss your plans for capital expenditure in 2015 and 2016, including raising and accessing finance please contact us on 01904 691141.