EC revision to block exemption from State Aid requires changes to capital allowances rules
Wed 16 Jul 2014
The European Commission general block exemption regulations (GBER) changed on 1 July 2014. Some advantageous capital allowance reliefs avoid challenge as State Aids by being framed to comply with the GBER. In order to remain protected from challenge changes are being made.
These changes are being made by FA 2014 and regulation to:
The main practical effect is to add the following to the list of excluded activities for the purposes of these allowances:
As regards enterprise zones, large companies have an additional requirement to be entitled to the allowances: the business must be of a kind not previously carried on by the company. However, as most EZs are undeveloped sites, this restriction is expected to have minimal impact.
Where it is not a new activity but a “fundamental change” in a product, production process or service, the qualifying expenditure on new machines must exceed the total of the previous three years’ accounting depreciation of machines being replaced. HMRC give as an example the machine being replaced cost £500k and was being depreciated straight line over 10 years. The cost of the new machine must be at least £150k.
The changes are enacted as FA 2014 Schedule 13 and SI 2014/1687 (BPRA changes, which come into effect on 22 July).
Enterprise zones Enhanced capital allowances (ECAs) were introduced in 2012 for a five year period to 31 March 2017 (s45K-N CAA 2001). Companies investing in plant and machinery for use in designated assisted areas within Enterprise Zones can claim 100% ECAs, subject to certain conditions. It was announced in the Budget that this relief is […]
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