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Transitional headache

08 January 2013 / Ray Chidell
Issue: 4385 / Categories: Comment & Analysis , Business , Capital Gains , Income Tax
RAY CHIDELL welcomes increased level of annual investment allowances but finds the transitional rules unjustifiably complex

KEY POINTS

  • Fluctuating rates of annual investment allowances.
  • Two sets of transitional rules.
  • Importance of the relevant date.
  • Notional periods.
  • Post April 2012.

Nearly every business has a financial interest in capital allowances and the announcement of a tenfold increase in the level of the annual investment allowance (AIA) was one of the big surprises in the autumn statement.

Plant and machinery allowances are subject to frequent change and have featured in most Finance Bills in recent years.

The scale of the AIA increase combined with the fact that it comes in from 1 January 2013 rather than 1 April 2013 causes this particular change to stand out from the rest.

The announcement in the autumn statement made everything seem very straightforward:

“The...

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