The Government's new Super-Deduction tax break is designed to allow businesses large and small to claim 130% of what they spend on new equipment against taxable profits ...
- A 130% Super-Deduction capital allowance
- A 50% first-year allowance for qualifying special rate assets
A business can cut it's tax bill by up to 25p for every £1 they invest by making purchases and there are many assets that qualify for the UK's new Super-Deduction. These include, but are not limited to:
- Solar panels
- Computer equipment and servers
- Tractors, lorries, vans
- Ladders, drills, cranes
- Office chairs and desks
- Electric vehicle charge points
- Refrigeration units
- Compressors
- Foundry equipment
The Chancellor has said he believes his new Super-Deduction Corporation Tax Relief will not only increase business spending, but increase overall investment as well. He believes that at its peak, the Super-Deduction should raise the level of business purchases by 10%, or roughly £20bn a year, according to the Office for Budget Responsibility (OBR).
One thing to be careful of is the disposal of that new asset before the end of the Super-Deduction scheme as it may end up costing you more in tax than you get deducted!
Thanks to the Super-Deduction, a purchase of £100,000 will give a corporation tax deduction of £130,000. The Corporation Tax Relief at 19% on that £130,000 will be £24,700 rather than the usual £19,000 when it falls within a company's annual investment allowance.
Certain purchases are excluded, so it's not possible to acquire assets such as company cars using the Super-Deduction scheme. You are going to need a solid purchasing strategy and good business planning, thorough record-keeping are going to be very important here if you want to take advantage of the scheme and not be penalised later on.
Ensure your plan is structured correctly, what you want to buy is eligible and that you can be sure you make the most of the tax savings covered by the Super Deduction scheme.
As always, my team and I are here to help put together your plan.
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.