As a business owner, it is important to stay informed of tax incentives and reliefs that can save your company money. One such opportunity is the Corporation Tax super-deduction capital allowance scheme, which allows businesses to claim back 130% on investments made in plant or machinery.

However, it is advised to take advantage of this as soon as possible, as the scheme is set to expire on 31st March 2023. Additionally, Corporation Tax rates are set to increase for more profitable businesses in April 2023, making this an even more pressing matter.

What is the Super Deduction scheme?

This scheme was introduced as an incentive for businesses to invest in new assets and aid in the recovery from the economic impact of the pandemic. It allows for a super-deduction of 130% on most new plant and machinery investments that qualify for main rate writing down allowances as well as a first-year allowance of 50% on most new plant and machinery investments that qualify for special rate writing-down allowances.

For example, if a company incurs £1 million of qualifying investments and decides to claim the super-deduction, they can deduct £1.3 million (130% of the initial investment) in working out their taxable profits. This can result in savings of up to 19% of that amount, or £247,000, on the Corporation Tax bill.

What plant and machinery are eligible?

• Ladders, drills, cranes
• Office furniture
• Refrigeration units
• Electric Vehicle charge points
• Compressors

Certain expenditures, such as the acquisition of company cars, are excluded from the relief. Additionally, the assets must be new and not second-hand or refurbished equipment in order to qualify.

What are the limitations?

It is important to note that this relief is only available to limited companies. However, unincorporated businesses can still benefit from the Annual Investment Allowance (AIA), which allows for a deduction of 100% for qualifying plant or machinery expenditure up to the threshold of £1 million.

With the expiration date rapidly approaching and Corporation Tax rates set to increase, it is important to take advantage of this incentive before it is too late.

Get in touch.

If you require assistance with the scheme, don’t hesitate to get in touch with us at hello@bkplus.co.uk