London accountancy firm Grunberg & Co is calling on businesses to explore the tax-saving opportunities afforded by the new super-deduction capital allowance scheme.
Announced in the Budget earlier this month, this new form of Corporation Tax relief will help reduce a company’s liabilities by almost 25p for every £1 of qualifying expenditure on new plant and machinery.
This new form of tax relief is intended to help businesses invest in equipment, such as computer equipment and servers, electric vehicle charge points and commercial vehicles, such as vans, lorries and construction equipment.
Nimesh Patel, Senior Tax Manager at Grunberg & Co, said: “Many businesses are now looking to the future beyond the pandemic as the Government’s roadmap out of lockdown continues to progress.
“Businesses should continue to invest in their growth, but with the challenges of the last year and constraints on cash flow many companies may be considering delaying their investment plans.
“This new super-deduction will remain available until March 2023 and so businesses must take advantage of this unique opportunity, which could help to significantly reduce their Corporation Tax bill.”
Alongside the super-deduction businesses will also be able to use an additional first-year allowance of 50% on most new plant and machinery investments that ordinarily qualify for special rate writing down allowances, which include improvement to parts of a building considered integral, thermal insulation and items with a long life.
“The first-year allowance will allow almost 10p of every £1 of qualifying expenditure to be claimed for, which with the main super-deduction could help businesses to significantly reduce the cost of improvements to their operations,” said Nimesh.
“These new capital allowances operate alongside the existing schemes such as the Annual Investment Allowance (AIA) which permits a deduction of 100 per cent for qualifying plant or machinery expenditure up to the threshold of £1 million until January 2022.”
Grunberg & Co added that companies looking to invest in new plant and machinery in the near future should wait until after 1 April to enjoy the tax relief afforded by this new scheme.