The government’s super-deduction tax scheme, which enables businesses to deduct up to 130% of the cost of assets from their taxable profits, ends on 31st March.
The 130% Investment Allowance – what is it?
The Government sought to encourage capital spending and boost productivity with this new allowance, which was announced in the 2021 Budget. From April of that year companies have been able to claim 130% capital allowances on new plant and machinery investments that would usually qualify for 18% tax relief.
How does the Super Deduction work?
Any business that pays tax that invests in “qualifying assets” between the dates will be allowed to deduct the full value of that equipment – PLUS an additional 30% – from their profits before tax for the first year.
For example
A business spends £100,000 on new equipment during the qualifying period. For that first year, their tax allowance is increased by £130,000 (£100,000 + 30%)
The company makes £200,000 of taxable profit that year, and claims £130,000 in capital allowances.
This deduction will give the business £24,700 off their annual tax bill in the first year. (19% of £130,000).
What sort of finance can I use?
If you’re looking to make the most of this new Super Deduction, any equipment under a Hire Purchase (HP) agreement will qualify for this additional allowance.
What sort of equipment is eligible?
A business that invests in “tangible capital assets” is able to claim these special allowances. The sort of equipment that qualifies could include (this list isn’t exhaustive)
EV charging points
Refrigeration units
Compressors
Foundry equipment
Office furniture
Ladders, drills and cranes
Computer equipment and servers
Solar panels
For more information simply call us on 01675 469200 or email [email protected] or simply click on the link below.
For more information on this allowance from HM Revenue & Customs, please refer to their website: www.gov.uk/guidance/super-deduction and we suggest you contact your Accountant to discuss your individual eligibility position. For information purposes only.
