Budget 2004

Grant Thornton


Business Taxation

Grant Thornton

Capital Allowances and Reliefs

Plant and machinery with expected life less than 25 years
Writing down allowance *†
25


First year allowances

Small enterprises

qualifying expenditure between 1 April 2004 and
31 March 2005
50
Small and medium sized enterprises§
40

The thresholds for small and medium sized enterprises have increased for accounting periods ending after 29 January 2004

All enterprises

designated energy saving plant and machinery
100
new electric cars and low emission cars
100
refuelling equipment for vehicles using natural gas or
hydrogen fuel
100
environmentally beneficial plant and machinery
100

Plant and machinery with expected life 25 years or more
writing down allowanceœ
6
plant used in oil extraction trade
24
Plant and machinery for overseas leasing
writing down allowance
10
Industrial and agricultural buildings, hotels, sports pavilions, dredging and highway concessions
writing down allowance
4

Enterprise zone buildings
initial allowance
100
writing down allowance
25

Flat conversion allowance
initial allowance
up to 100
writing down allowance
25

Research and development
100

UK film production and acquisition
§
100
Patent rights and know how#
writing down allowance
25

Company tax credits
Research and development §
small and medium sized enterprises (SME) ƒ
150%
large companies ƒ
125%
Loss making SMEs can surrender deduction for a payment of 16% of the amount surrendered (subject to conditions)

Cleaning up contaminated land
150%

Intangible assets (including intellectual property and goodwill)

Companies can claim tax relief for expenditure incurred on the creation, acquisition and enhancement of intangible assets. Relief is based on the accounts amortisation unless an election is made for relief to be granted at a fixed rate of 4% per annum.

* Restricted to £3,000 per annum for cars costing over £12,000, other than those with low emissions
On reducing balance
Expenditure on information and communications technology equipment before 1 April 2004 qualifies for 100% allowance
§ Restrictions apply
Expenditure pre 1 April 2008
œ 25% rate applies where expenditure does not exceed £100,000 per annum or is on assets in dwellings, shops, showrooms, hotels, offices
æ On renovation or conversion of space above commercial premises to provide flats to rent
# Not applicable to acquisitions by companies
ƒ Additional credits available for certain vaccines research expenditure from 22 April 2003

The figures shown here are subject to ammendment as the Finance Bill passes through Parliament.

This information has been prepared only as a topical guide to tax and personal financial matters. No responsibility can be accepted by us for loss occasioned to any person acting or refraining from acting as a result of any material contained in this publication.

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