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Could a Capital Allowance Tax Relief Claim Help to Ease Your Cash Flow?

July 2020

Finding ways to ensure that your business maintains cash flow despite the recent interruptions is going to be an important task for many businesses over the coming months. With many businesses still unsure of when they will be able to re-open, and others only just taking tentative steps in this new world, ensuring that you have a good cash flow is vital.

One area to explore is whether you can benefit from Capital Allowance tax relief.

What are Capital Allowances?

As stated in our guide to capital allowances – “In a nutshell, capital allowances are a way of saving tax when your business buys a capital asset”. If you purchase equipment for the day-to-day running of your business then it is likely that these items will be classed as capital assets.

Many businesses have taken advantage of the enforced closure over the past few months to renovate their offices, or upgrade equipment. Much of the equipment purchased and the improvements made could be classed as capital assets.

Even if you haven’t been making changes, it is possible to backdate capital allowance claims if they have not already been made. This could be a way of freeing up some money to help with cash flow.

Capital allowances offer tax relief on costs incurred on the previously described capital assets, and claiming against it may well help to free up some cash flow for the coming months.

Some examples

Example A

In order to facilitate your staff working from home over the last few months, and for your new flexible approach to working you have had to invest in a number of new laptops. Those laptops will be classed as capital assets and could be subject to a capital allowances claim.

Example B

A local restaurant has worked hard to get their location ready to ensure that they can provide a COVID-secure location for diners. They have installed screens and hand sanitiser stations throughout the restaurant. This investment could also be classed as a capital allowance, so could be claimed against.

Capital allowances are often under-utilised and may well be a way to help free up some of your cash flow at this time. They can also be backdated, so if you have previously made these investments and haven’t claimed you may still be able to do so.

How do I know if I am eligible?

There are eligibility criteria that you need to meet when it comes to capital allowance claims, but our experienced team can help you understand if you do, they can talk you through your options and even complete the claim on your behalf.

If you would like to find out more, please take a minute to book a free call with one of our specialists.

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