Treasury acts on capital allowances loophole
The Government has moved early to close a loophole affecting capital allowances.
The loophole concerns accelerated first-year capital allowance claims for plant and machinery. It meant that firms could receive early tax relief.
The loophole was to have been dealt with by April 2012, but the Exchequer has decided to bring forward changes to the law preventing such early claims.
As a result, the new legislation came into effect on 12 August 2011.
Justine Greening, the Economic Secretary to the Treasury, said: “The Government is determined to reduce tax avoidance in order to protect the Exchequer, which provides funding for public services, and to maintain fairness for the taxpayer.
“By ending this loophole we will preserve important revenue while maintaining a fair system of capital allowances to support business investment.”