Super Deduction - Ends 31st March 2023!
Posted on 10th February 2023
This Week's Friday Tax Tip
The super-deduction allowance is an attractive tax incentive for business investment. Your company can claim back up to 25p for every pound you invest in ‘qualifying’ machinery and equipment for two years from 1 April 2021.
You will also benefit from a 50% first-year allowance for qualifying special rate (including long life) assets – the Chancellor has called this the ‘SR allowance’.
Both the 130% super-deduction and 50% first-year SR allowance could reduce your corporation tax bills until 2023 because they give qualifying equipment a much higher tax deduction in the tax year of purchase than would otherwise normally occur.
Your business is eligible if you spend money on any of the assets listed below between 1st April 2021 and 31st March 2023.
What equipment can I claim the super-deduction or the SR allowance?
Not all business investments will qualify for the new allowances, but the qualifying groups are quite wide:
Super-deduction’ includes all new plant and machinery that would ordinarily qualify for the 18% main pool rate of capital allowances (writing down allowances). Examples include:
computer equipment and servers
tractors, lorries, vans
ladders, drills, cranes
office chairs and desks
electric vehicle charge points
‘SR allowance’ covers new plant and machinery that qualify for the 6% special rate pool, including integral features in a building and assets with a life of over twenty-five years. Examples include:
water pipes within a building
an electrical system within a building.
Bear in mind that that certain expenditure is excluded, for example, the acquisition of company cars, as well as the purchase of second-hand plant and machinery.
The super-deduction and the SR allowance don’t apply to partnerships or individuals. You need to have a company to get these valuable reliefs.
For more guidance call the team at Holmes Accountancy on 01908 315716 or contact us here
The tax tip is provided for general guidance only; further advice should be sought, for specific issues.
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