Are you thinking of investing in new plant or other equipment? Remember that the super-deduction offering 130% first-year tax relief is available to companies until March 2023.
The super-deduction tax break was introduced on 1 April 2021 and allows companies to deduct 130% of the cost of any qualifying investment from their taxable profit figure. It is available on most new plant and equipment that would ordinarily qualify for 18% main rate writing down allowances. This means that for every £1 a business invests they can reduce their tax bill by up to 25p. The temporary tax relief applies on qualifying capital asset investments until 31 March 2023.
The super-deduction is designed to help companies finance expansion in the wake of the coronavirus pandemic and help to drive growth.
Howard adds ‘Maximising tax savings through reliefs and allowances is something we do for all our clients and although the super-deduction scheme is available until March 2023 it is still important to choose when to buy new assets so that it coincides with your accounting or financial year end. For example if your financial year end is March, and you buy before the end of the period then it is included in the current tax return whereas purchases bought April onwards would be claimed on the next return so the benefit would not be realised until another year down the line!
The super-deduction scheme is only available to limited companies paying corporation tax however sole traders and self-employed can still take advantage of annual investment allowance where 100% of the asset value can be claimed against tax instead of the 18% main allowances. If you have significant purchases planned it could even be worth becoming limited and we are happy to offer a free consultation to any sole trader considering this as an option.