|
Standard capital allowance
for investment in plant permits 25% of the capital cost to be offset
against tax in each year on a reducing basis. Of an £8000 investment £2000
could be offset in the first year, £1500 of the £6000 balance in year 2
and so on. But with ECA 100% of the cost can be offset in Year 1 giving a
cash flow gain for further investment.
You can claim for
equipment cost, installation cost, professional fees and building
alteration costs.
Conventional Capital Allowance scheme
|
Year |
Capital Balance |
Tax Relief |
Net Value @ 30% tax |
| 1 |
£8,000 |
£2,000 |
£600 |
| 2 |
£6,000 |
£1,500 |
£450 |
| 3 |
£4,500 |
£1,125 |
£338 |
| 4 |
£3,375 |
£844 |
£253 |
| 5 |
£2,351 |
£633 |
£190 |
| 6 |
£1,888 |
£475 |
£142 |
| 7 |
£1,424 |
£356 |
£107 |
|
Total at end of Year 7 |
|
£6,933 |
£2,080 |
Enhanced
Capital Allowance scheme
|
Year |
Capital Balance |
Tax Relief |
Net Value @ 30% tax |
| 1 |
£8,000 |
£2,000 |
£2,400 |
| 2
- 7 |
£0 |
£0 |
£0 |
|
Total at end of Year 7 |
|
£8,000 |
£2,400 |
|