Given the fact that many businesses are now gearing up as restrictions ease, I wanted to draw your attention to the ‘super-deduction’ announced in the Budget in March, which applies to companies investing in qualifying new plant and machinery assets between 1 April 2021 and 31 March 2023.
If you trade as a company and you buy new plant and machinery between 1 April 2021 and 31 March 2023, you will be able to claim 130% of the cost against your corporation tax bill, i.e. if you bought an asset for £10,000, you’d get a £13,000 deduction, saving you an extra £570 in tax.
For tax purposes, plant and machinery includes most assets except cars and buildings. More specifically, the following list of assets would qualify:
- Computer equipment and servers.
- Tractors, lorries and vans.
- Ladders, drills and cranes.
- Office chairs and desks.
Sole traders and partnerships will still have to claim the Annual Investment Allowance (‘AIA’) which gives 100% relief against the cost of plant and machinery. Any second-hand purchases of assets for any business would qualify for AIA.
Therefore, if you are thinking of investing in new assets to run your business, the next 2 years might be the time to do it as the tax allowances available are better than they might be in future periods.
As always, please get in touch if you have any queries or questions.