Business capital allowance, what is it?

[meagain]

What difference will an increase to 40% in the budget mean? Sorry to be dim, but was wondering...

[Mx_Stu]

From a quick look at the budget notes it appears to be a temporary increase in the first year allowance from 20% to 40%

I am no capital allowance expert but believe you have the Annual Investment Allowance (Currently on first £50k of plant and machinery) plus 100% first year allowances Co2 efficient cars, energy saving assets etc and assume this is on plant and machinery falling outside of this.

If you look at the budget note 4 it’s covered in detail:

http://www.hm-treasury.gov.uk/d/Budget2009/bud09_n...

[softtop]

if you look at page 13 of this document it talks about capital allowances. My question is, " does this mean that in the first year of trading, you can claim for any investments? If I bought a holiday home for the rental market and met all of the criteria for rental, does this mean I can claim for a new bathroom, kitchen, garden makeover etc at 40% as a PAYE person?

[Eric Mc]

For trading businesses, Capital Allowances are generally available on plant and machinery and vehicles. They are generally NOT availlble on buildings.

Letting of a holiday home has, up until now, been treated as a business (unlike ntrmal buy to lets which have special Rental Income rules and do not attract capital allowances in the same way as businesses).

In the 2009 Budget, Darling announced that the tax treatment of holiday lets was going to be made the same as ordinary lettings.