Relief for pre-trading expenditure does not extend to capital expenditure. However, similar rules allow capital expenditure qualifying for capital allowances to be treated as having been incurred on the first day on which trading begins.
However, first year allowances are given by reference to the date on which the expenditure was actually incurred.
Example:
David starts trading on 1 September 2012. In preparation for trading he spends £10,000 on plant and machinery. The expenditure is treated as having been incurred on 1 September 2012 (the first day of trading). He claims the annual investment allowance, giving full relief for the expenditure against his profits of the first year.
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