Nunn Hayward - Abacus Janaury 2004

Abacus January 2004

Withdrawal of 100% Allowances on Information Technology (IT) Expenditure – Deadline 31 March 2004

Expenditure on IT equipment has for the last four years enjoyed 100% capital allowances (as opposed to the usual 40%/25%) when incurred by a small business.

The Budget is expected on the 9th April 2004 and to date, nothing has been published by the Revenue extending the date, on which the beneficial treatment for IT expenditure expires, being 31st March 2004.

The Department of Trade and Industry announced last November that it was increasing the turnover threshold for companies to be classified as a ‘small’ business to Ł5.6 million which means that from the start of this month more firms can claim tax breaks on IT purchases. These businesses will have to move quickly to take advantage of this small window of opportunity.

Under current tax rules, small businesses are able to claim 100% tax relief on IT purchases. Broadly IT is defined as computer hardware, software and telecom equipment.

Whilst we would never advocate clients going out and spending for the sake of it, where there is planned expenditure over the next say six months on IT equipment, it might be beneficial to accelerate this expenditure such that it is incurred on or before 31st March 2004 to enable the tax advantages referred to above to be gained.

The threshold for ‘medium sized’ business has also been raised to Ł22.8 million. This increases the ability to claim 40% “First year allowances” to many more businesses.

The new thresholds for small and medium businesses are: -

Small Sized Businesses	Threshold
Turnover Balance Sheet total Number of employees	Not more thant Ł5.6 million Not more than Ł2.8 million Not more than 50
Medium Sized Businesses	Threshold
Turnover Balance Sheet total Number of employees	Not more thant Ł22.8 million Not more than Ł11.4 million Not more than 250

If you are unsure as to the type of equipment to which this applies or whether the size of your business might not be defined as small, please do not hesitate to contact Steve Cook, Tax Partner.

STOP PRESS – 31ST JANUARY 2004 – SELF ASSESSMENT DEADLINE

Not completed your 2003 Tax Return? Don’t panic. Talk to our tax department about completing a Return.

Even if you realise that you are unable to meet the 31 January 2004 deadline with help you could file your return sooner rather than later thus avoiding too many late filing penalties.

To help mitigate late filing penalties/interest why not pay some tax on account before the 31st January 2004.

Should you have any queries or require help contact Steve Cook, Tax Partner steve@nunn-hayward.com

Please contact us to discuss the above further

Tel: 01753 888211 Fax: 01753 889669 Email: abacus@nunn-hayward.com
Nunn Hayward, Sterling House, 20 Station Road, Gerrards Cross, Bucks SL9 8EL.

Chartered Accountants, Registered Auditors and Insolvency Practitioners. Authorised to conduct Investment Business under the Financial Services and Marketing Act 2000 and regulated by the Financial Services Authority.

This publication has been prepared as a guide only to topics of current financial and business interest. No responsibility for loss occasioned to any person acting or refraining from acting as a result of any material in this publication can be accepted by us. All rights reserved.

If you would like to subscribe to future editions of the Abacus Newsletter then please e-mail your name and address and we will add you to our mailing list.