12th MARCH 2008 BUDGET PROPOSALS
AND CHANGES FOR 2008/2009 previously announced
(Subject to details in the Finance Bill)
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6 Businesses - Captial Allowances

6.1 A new Annual Investment Allowance (AIA) will be introduced from 2008/2009 for individuals, partnerships and companies, replacing first year allowances on plant and machinery.

6.2 The AIA will provide an annual 100% allowance for the first £50,000 of investment in plant and machinery (other than cars) to all businesses, regardless of size.

6.3 Expenditure in excess of the annual £50,000 limit will fall into either a 20% pool or a 10% pool (for long life assets), where it will attract writing down allowances at the appropriate rate.

6.4 The AIA does not replace the existing 100% enhanced capital allowances schemes for environmentally beneficial plant and machinery.

6.5 Industrial Buildings Allowances and Agricultural Buildings Allowances are being withdrawn over a four year period from 2008/2009.

7 Businesses - Research and Development Tax Credits

7.1 From 2008/2009 it is proposed that the enhanced deduction available to small and medium sized businesses in respect of qualifying research and development expenditure will increase from 150% to 175%.