The Treasury is to introduce legislation "as soon as possible" to kill tax avoidance schemes developed in response to the government's 100 per cent first year tax allowance. This is designed for small businesses buying IT "for bona fide use for their businesses". But the provision of plant and software for leasing is specifically excluded under the scheme.

According to the Treasury, these avoidance schemes "make use of the fact that, although first year allowances are not due where software is acquired for leasing, there is no such restriction where the software is acquired to be exploited by the granting of rights to use or otherwise deal with that software".

The Treasury is to close this loophole from today. The press release is here. ®