23rd March 2011 BUDGET PROPOSALS
AND CHANGES FOR 2011/2012 previously announced
(Subject to details in the Finance Bill)
Ellis Atkins have taken all due care in the presentation of these notes. No responsibility for loss occasioned to any person or company acting or refraining from action as a result of any material in these notes can be accepted by Ellis Atkins, its partners or staff. Please contact us or your own professional advisor for advice specific to your circumstances.

6 Businesses - Captial Allowances

6.1 The Annual Investment Allowance (AIA) was introduced from 2008/2009 for individuals, partnerships and companies.

6.2 The AIA provides an annual 100% allowance for the first £100,000 of investment in plant and machinery (other than cars) to all businesses, regardless of size. This will be reduced to £25,000 from April 2012.

6.3 Expenditure in excess of the annual £100,000 limit will fall into either a 20% main rate pool or a 10% special rate pool where it will attract writing down allowances at the appropriate rate. From April 2012 expenditure in excess of the annual £25,000 limit will fall into either an 18% main rate pool or an 8% special rate pool.

6.4 The AIA is in addition to 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6.5 Industrial Buildings Allowances and Agricultural Buildings Allowances are being withdrawn over a four year period from 2008/2009.

6.6 6.6 From 2011/12 the term of a short life asset will be increased to eight years from four years.

7 Businesses – Loss Relief

7.1 Furnished Holiday Lettings

From 2011/12 losses from furnished holiday lettings will no longer be able to be set against other personal income, only income from the same furnished holiday letting business. Furthermore UK losses can only be offset against UK profits and European Economic Area losses against other EEA profits.

From 2012/13 to qualify as a furnished holiday let the property must be available to let for 210 days and actually let for 105 days during the year.

Businesses - Research and Development

8.1 Small and medium sized enterprises

From 2011/12 Research and Development Tax Credits for small and medium sized enterprises will be increased from 75% to 100% of qualifying expenditure. From 2012/13 it will be further increased to 125%.