Business Tax
Capital allowances on cars
As announced last year, there will be an ‘extension and tightening’ of the enhanced capital allowances for low-emission cars. 100% first year allowances will be available for cars rated up to 95g/km and bought before 31 March 2015 (110g/km for expenditure up to 31 March 2013).
From the same date, businesses buying cars with ratings above 130g/km will only qualify for the reduced writing down allowances of 8%. At present, cars with ratings up to 160g/km are put into the ‘general pool’ with the higher 18% rate of WDA.
Cash basis
Further details were published of the ‘cash accounting basis’ which small unincorporated businesses may use to compute their income tax profits from April 2013. The intention is that those businesses which are below the VAT registration threshold will be able to prepare simpler accounts, ignoring debtors, creditors and stock, and the distinction between capital and revenue, and simply pay tax on the difference between ‘cash in’ and ‘cash out’.The Budget announcements recognise that the original proposals were themselves quite complicated, and attempts have been made to simplify them.
The cash basis will be compulsory for anyone who claims Universal Credit.
| Tax Tip |
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| If you qualify for the cash basis, take a look – but don’t rush in! |