CAPITAL ALLOWANCES

With effect from 31 March 2004 the 100% claim for Capital Allowances on computers and related equipment has been withdrawn. A first year allowance of 50% for small businesses (eg. Turnover less than £5.8m) is now available.

100% claims for allowances are available for the following:

Research and development
Enterprise zone buildings
Energy saving technology which would include cars:

Honda Incite
Vauxhall Astra 1.7 DTI ECO 4LS
Renault Cleo 1.5 DCI
Audi A2 1.4 TDI

Water efficient technologies such as taps, toilets. Renovation and conversion of flats over shops.

Capital allowances are also now available for intangible assets such as purchased goodwill as follows:
Companies minimum 4% straight line.
Other persons 25% reducing balance.

NATIONAL MINIMUM WAGE

With effect from 1 October 2004 payments to 16 to 17 year olds are also now included within the legislation and the rates are as follows:- .

CORPORATION TAX

The rates of Corporation Tax for the years to 31 March 2004 and 31 March 2005 are set out below:

Clients should be aware of the following points.

1. Profits distributed to own company shareholders taxed at 19% including the first £10,000.

2. Companies with taxable profits in excess of £1.5m may be liable to quarterly instalment payments on account. Whilst this may appear high, this amount is split equally between associated ' companies. Consequently, if there are say, 10 associated companies and any company with taxable profits of £150,000 or more is going to have to account quarterly for its Corporation Tax.

3. All the tax rates referred to above are adjusted for associated companies. Consequently, clients need to advise us if they are aware either of their interest in any other companies or any interest that their spouses may have in any companies so that we can then check whether that is going to affect the associated company provisions.