Perhaps the most innovative give-away in the recent budget was “Super-deductions for investment expenditure”.<\/p>\n
What does this mean?<\/p>\n
Companies that invest in qualifying plant and machinery in the period from 1 April 2021 to 31 March 2023 will benefit from enhanced capital allowances. Investments in assets that qualify for the main rate of capital allowances of 18% will benefit from a 130% first-year allowance. This means that for every £100 that you spend, you can deduct £130 in computing your taxable profits. This is equivalent to a tax saving of 24.7%.<\/p>\n
What this change does not mean is the notion that you can deduct 130% of the cost of a qualifying purchase from your tax bill. The deduction is made from your company’s taxable profits.<\/p>\n
For example, if your company invests say £5,000 in qualifying plant it will be able to write off £6,500 (£5,000 x 130%) against its taxable profits. As long as your company has taxable profits in excess of £6,500, it will save £1,235 (£6,500 x 19%) in corporation tax. Which means:<\/p>\n
Your tax saving is 24.7% (£1,235\/£5,000) of your investment cost, and<\/p>\n<\/li>\n
The net cost of your investment is £3,765 (£5,000 – £1,235).<\/p>\n<\/li>\n<\/ul>\n
As you would expect, there will be circumstances – grey areas – where the legislation that maps out the do’s and don’ts to claiming this relief will deny you the 130% deduction. In their notes describing the proposed changes HMRC said:<\/p>\n
“Certain expenditures will be excluded…, there will be exclusions for used and second-hand assets and expenditures on contracts entered into prior to 3 March 2021 even if expenditures are incurred after 1 April 2021. Plant and machinery expenditure which is incurred under a Hire Purchase or similar contract must also meet additional conditions to qualify for the super-deduction…<\/em>”<\/em><\/p>\n However, this is a significant incentive to invest if your company is likely to be profitable from 1 April 2021. To ensure that any significant investment you make will qualify, please call so we can consider the likelihood of a successful claim.<\/p>\n","protected":false},"excerpt":{"rendered":" Perhaps the most innovative give-away in the recent budget was “Super-deductions for investment expenditure”. What does this mean? Companies that invest in qualifying plant and machinery in the period from 1 April 2021 to 31 March 2023 will benefit from enhanced capital allowances. Investments in assets that qualify for the main rate of capital allowances […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1001","post","type-post","status-publish","format-standard","hentry","category-uncategorized","blog-left-layout","blog-style-postblock","","blog-alt-odd"],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"http:\/\/taxbak.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/1001","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/taxbak.co.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/taxbak.co.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/taxbak.co.uk\/index.php\/wp-json\/wp\/v2\/comments?post=1001"}],"version-history":[{"count":0,"href":"http:\/\/taxbak.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/1001\/revisions"}],"wp:attachment":[{"href":"http:\/\/taxbak.co.uk\/index.php\/wp-json\/wp\/v2\/media?parent=1001"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/taxbak.co.uk\/index.php\/wp-json\/wp\/v2\/categories?post=1001"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/taxbak.co.uk\/index.php\/wp-json\/wp\/v2\/tags?post=1001"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}