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Following the far reaching alterations to capital allowances announced
earlier in the year, the Chancellor today announced a smaller number of
further changes to the UK capital allowances system in the Pre-Budget
report.
Fire safety expenditure
Legislation specifically extending capital allowances to building
alterations made in response to a Fire Authority notice will be withdrawn
from April 2008. This follows the fire safety legislation moving to operate
on a self assessment basis and CAA2001 s.29 no longer serving its purpose.
Biofuel plants
The Chancellor today announced that the Government has decided not to pursue
State Aid clearance for its proposed 100% first year allowance for biofuel
plants that meet certain qualifying criteria and which make good carbon
balance inherent in their design, stating it would offer little value to a
limited number of businesses while introducing considerable administrative
complexity. This proposal was only announced in Budget 2007.
Disposal of plant & machinery to a non resident
Measures announced today result in capital allowances being fully recaptured
when plant & machinery is disposed of to a non resident. This is achieved by
the repeal of s222 CAA 2001, which limited the disposal value to the Tax
Written Down Value in the case of certain sale and finance leasebacks.
Following the repeal of s222 CAA 2001, the ability of lessor to access
capital allowances is restricted by deeming leasebacks to be Long Funding
Leases except in the case of plant & machinery less than 4 months old.
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